Hyundai upbeat despite slide in earnings
October 27, 2005
Seoul - South Korea's largest auto company, Hyundai Motor, posted weak third quarter results on Thursday, blaming the shortfall on a labour strike last month and seasonal factors while giving a more positive forecast.
Hyundai Motor said its net profit in the July-September period was 534.9 billion won (R3.41 billion), up 27.1 percent from a year earlier but down 12.8 percent from the previous quarter.
Its operating profit for the three months to September was 268 billion won, down 42.2 percent from a year earlier and down 41.5 percent from the second quarter.
Market consensus had been that the company would post an operating profit of not less than 300 billion won and up to 350 billion won.
Hyundai Motor shares fell sharply in early trade but an optimistic outlook for the fourth quarter sparked a strong recovery, with the stock closing 1.73 percent up at 76 500 won (R486.30).
"The third quarter results weakened due to seasonal factors and the partial strike in September," the company said.
"But the performance will improve in the fourth quarter as the operating ratio (at Hyundai's auto plants) is going up and demand for new cars keeps increasing," it said.
Hyundai Motor said it would deal with high oil prices by increasing compact and mid-size car sales in the fourth quarter.
"Our third-quarter earnings showed a poor performance, but sales have been picking up recently and we are recovering from the drop in the third quarter," Hyundai Motor said.
A partial strike crippled operations at Hyundai Motor for two weeks in September, resulting in losses of some $578 million.
Hyundai Motor said it planned to strengthen its line-up for mid-sized and small cars to meet demand for fuel-efficient vehicles and would step up efforts to improve its brand image abroad in luxury and recreational models.
The September quarter results marked the first time in two years that Hyundai Motor's operating profit fell below 300 billion won.
Sales declined 6.0 percent from a year earlier to 6.15 trillion won and were down 11.5 percent from the previous quarter.
In the three months, it sold 225 100 cars abroad, down 17.5 percent year-on-year, and 135 756 cars in the domestic market, up 2.7 percent. Overall sales volumes plunged 10.9 percent to 360,856 units.
Cumulative revenues for the nine months to September stood at 19.27 trillion won, down 3.3 percent year-on-year, with operating profit at 1.049 trillion won, down 36 percent. - AFP
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