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SOUTH KOREA: Hyundai reports 27% decline in Q3 net profit

By just-auto.com editorial team | 30 October 2006

Hyundai has reported a 27% decline in net profit in its third quarter, which it attributed to industrial action taken during the summer, and the continued appreciation of the Korean won against the US dollar and the euro.

Third quarter net profits on sales were 283bn won (US$300m) on sales of 5.887 trillion won (US$6.23bn). Sales were down 15.9% compared to the second quarter of last year.

Labour disputes occur annually in South Korea, as a part of regular wage negotiations, but they were particularly damaging this year, particularly at Hyundai. The company's output was stopped for almost a month causing production losses of 93,882 vehicles, valued at 1.3 trillion won (US$1.4bn).

Operating profit fell by nearly a third to 183bn won (US$232m).

Another negative impact cited by the company was a spike in marketing expenses as a result of the Hyundai's sponsorship of the 2006 FIFA World Cup in Germany.

Figures for the first nine months of the year reveal a 2.7% reduction in sales to 1,170,271 units. Sales revenues rose to 19.751 trillion won (US$20.9bn), equivalent to a 2.5% improvement over the same period last year thanks to a higher value product mix with the introduction of the new Santa Fe SUV and Grandeur (Azera) premium sedan which lifted margins.

Net profit for the first nine months reached 989bn won (US$1.05bn), a decline of 40.4% over the same period last year.

Hyundai┬┤s overseas manufacturing subsidiaries in India, China and the United States continued to show positive growth on both a unit sales and revenue basis. The company reported equity earnings of 52.3bn won (US$55m), 100.9bn won (US$107m), and 57.3bn won (US$61m) on its investments in Beijing Hyundai Motor, Hyundai Motor India and Hyundai Motor Manufacturing Alabama.