SOUTH KOREA: Better financials seen at strike-free Hyundai

By just-auto.com editorial team | 19 October 2007

Hyundai Motor is expected to post a 40% jump in quarterly profit thanks to peaceful labour relations and higher home market sales.

But Hyundai still faces difficulties overseas, especially in the United States and China, as sales there are unlikely to recover soon, and as the won maintains its strength against the dollar, Reuters reported, citing local analysts, who also said that rising raw material prices are another hurdle.

"Hyundai deserved higher profits in the quarter as the union did not stage a strike and the outlook of the company is not that bad," Kim Jae-woo, an auto analyst at Mirae Asset Securities, told the news agency.

"But I remain cautious on the company given the current market conditions. Hyundai is unlikely to show an improvement soon in the United States, the world's top auto market, and China, the world's fastest growing market," he reportedly added.

Reuters noted that Hyundai reached a wage deal in September with its unionised workers, avoiding a strike for the first time in 10 years.

This year's smoother labour relationship is expected to help Hyundai post a 394bn won ($US430m) net profit during the third quarter, up from 282.8bn won a year ago, a Reuters poll of 10 analysts showed.

July-September operating profits are likely to almost double to 341.3bn won from a 183.3bn won profit a year earlier, the news agency added. Sales in the third quarter were seen growing 16.5% to 6.86 trillion won.

However, the news agency reported that it won't be so good at affiliate Kia, expected to post a 14.5bn won net loss for the quarter as it continues to struggle with a weak model range and poor sales, although the consensus figure is an improvement from the 44bn won loss posted a year ago.

Full-year 2007 net profit at parent Hyundai is expected to rise 20.7% to 1.84 trillion won, according to 26 brokers polled by Reuters Estimates.