Friday, April 26, 2013

Hyundai's profit falls 15% at 1° tri, hit by foreign exchange and stops

Seoul-the South Korean carmaker Hyundai vehicles reported a 15 per cent annual fall in quarterly net profit, in line with market forecasts. The result was hit by production outages in weekend shifts and unfavourable foreign exchange fluctuations.
The second consecutive quarterly profit fall Hyundai puts even more pressure for the company to expand capacity in the United States and elsewhere, to reduce the impact of the weaker yen against the won, which decreases their price competitiveness, as well as labor problems in South Korea.
Hyundai, which combined with its affiliate Kia is the fifth largest automaker in the world, reported on Thursday a net profit of 2.1 trillion won (1.88 billion dollars) from January to March, compared with a forecast of analysts of 2 trillion won.
The Chairman of the Board of the group, Chung Mong-koo, whose father founded the Hyundai conglomerate, slowed the ability of the company's expansion in recent years, in an attempt to avoid repeating the Toyota recall crisis in 2009 and 2010, which was in part a result of an aggressive growth of production.
The Union of Hyundai workers returned to work shift last weekend, the seventh consecutive stoppage, resulting in losses in production of 48 thousand vehicles, worth almost 1 trillion won.
The result of the Hyundai was also hampered by the appreciation of the won 4.5 percent during the first quarter. This reduced the value of results in international operations, while the weaker Yen helped Hyundai's Japanese rivals.
"The expectations had already been downloaded to the Hyundai's gains because of the coins and the production disruptions of weekend. But the results today ... met the expectations, which helped ease concerns about the profits, "said the Fund Manager in LS Asset Management, Kim Sung-soo.
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