Hyundai Motor Co., South Korea's largest automaker, said Thursday its fourth-quarter net profit tumbled 22 percent, hurt by a firmer local currency and lost production from labor strikes.
Some analysts painted a pessimistic view of the automaker's near-term outlook, citing the won's steady rise against the U.S. dollar and the opaque management style of Hyundai Motor Chairman Chung Mong-koo.
"Hyundai Motor's difficulty may continue during the first half of this year as the unfavorable foreign exchange rate would undermine Hyundai Motor's earnings," said Suh Seong-moon, an analyst at Korea Investment and Securities.
Hyundai Motor, the world's seventh-largest automaker with its affiliate Kia Motors Corp., reported that its quarterly net profit plunged to 537 billion won (US$574 million) in the three months ended Dec. 31, compared with 691 billion won for the same period a year earlier.
The result, however, beat the market consensus of 438 billion won.
Fourth-quarter sales fell 6.6 percent from the previous year to 7.58 trillion won, with operating profit also declining 8.6 percent to 306.7 billion won, the company said. A stronger won makes Hyundai Motor's vehicles more expensive in overseas markets and erodes the value of earnings abroad when converted into the South Korean currency.
The Korean currency traded at 939 won, or about 10 percent higher, against the U.S. dollar in the fourth quarter compared with a year earlier.
Besides the stronger won, Hyundai Motor was struggling with persistent labor disputes and chairman Chung's fraud charges in 2006.
Last week, prosecutors demanded a six-year jail term for the 69-year-old chairman Chung, who was indicted on embezzlement and breach of trust charges.
Chung was arrested last April on alleged charges of raising and spending slush funds worth about 70 billion won ($74 million), which were used for bribing government officials in exchange for political favors.
Chung, who was released on bail in June after spending two months in jail, awaits a verdict and sentencing on Feb. 5.
Shares of Hyundai Motor fell 0.75 percent to 66,500 won on the Seoul bourse.
For all of 2006, Hyundai Motor's net profit plummeted 35 percent from a year earlier to 1.5 trillion won.
Full-year operating profit also fell 10.8 percent to 1.2 trillion won and sales slipped 0.2 percent to 27.3 trillion won.
The company sold a total of 1.611 million vehicles last year.
Hyundai Motor said its sales target this year is 1.72 million vehicles, up 6.5 percent from last year. The automaker aims for a 14 percent rise in 2007 sales to 32 trillion won.
Seoul, Jan. 25 (Yonhap News)
Hyundai Motor's quarterly profit tumbles 22 pct, outlook murky |
