Strikes may undermine Hyundai Motor profits

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Strikes may undermine Hyundai Motor profits

Hyundai Motor, Korea’s top automaker, is unlikely to meet the market consensus for its third quarter earnings due mainly to frequent strikes by the company’s unionized workers, analysts said yesterday.

Hyundai is expected to post 19.5 trillion won ($17.5 billion) in sales for the July-September period, 1 trillion less than the market estimate of 20.5 trillion won, said Goh Tae-bong from HI Investment & Securities. Its operating profit is forecast to reach 2.1 trillion won for the three-month period, he added.

The carmaker’s Q2 sales hit 21.9 trillion won, with operating profit of 2.5 trillion won.

“Hyundai suffered an estimated sales loss of 1.6 trillion won, or 80,000 vehicles, due to 12 walkouts between July 13 and Sept. 4,” said Goh.

Shares of Hyundai Motor were trading at 235,500 won on the Seoul bourse as of 10:15 a.m., down 0.42 percent from the previous session.

However, Hyundai will turn around in the final three months of the year on the back of raised operating capacity in its facilities at home and abroad, and strong overseas sales, said the analyst.

Hyundai and Kia have plants in the United States, China and Europe.

The company’s management and labor reached a collective agreement last month and production has almost normalized.

“In the fourth quarter, Hyundai will show a steady performance thanks to government-led tax cut benefits and the release of new cars overseas,” said Goh.

Goh expected Hyundai’s shipments to reach 1.17 million vehicles for the October-December period.

Meanwhile, HMC Investment & Securities said Hyundai and its smaller affiliate Kia Motors will grow 8.6 percent on-year for the whole of 2012 with a combined 7.17 million units sold.

“The brand image of Hyundai and Kia has improved notably in overseas markets,” said analyst Lee Myung-hoon from the brokerage firm.


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