Hyundai Motor Q3 profit hit by workers’ strikes

Seoul (AFP) – South Korea’s Hyundai Motor on Wednesday announced a sharp fall in profits for a third quarter, hit by lengthy industrial action that also took a toll on the national economy. 

Hyundai is the biggest automaker in South Korea and, along with its smaller affiliate Kia, forms the world’s fifth-largest automaking group.  

Tens of thousands of workers at the firm’s plants in South Korea staged full or partial strikes for several weeks through July to October demanding higher wages. 

Production losses were estimated at 3 trillion won ($2.6 billion), and Hyundai said its third quarter net profit fell 7.2 percent from a year ago to 1.1 trillion won.

It was the 11th consecutive quarter of profit downturn for Hyundai which has struggled with slumping sales in key emerging markets, including China, and currency swings that eroded margins. 

Third-quarter operating profit also plunged 29 percent to 1.06 trillion won, while sales dropped 5.7 percent to 22 trillion won. 

“Disruption in production caused by the strikes had a huge impact in the third quarter,” the firm said in a statement. 

It also warned of more challenges ahead, citing slowing economic growth worldwide that has sapped demand for new cars. 

The firm sold 1.08 million cars from July to September, down 3.3 percent from a year ago. 

In an effort to underline the challenges facing the firm, hundreds of Hyundai executives vowed on Tuesday to take a 10 percent wage cut from this month to the end of 2017. 

Hyundai and Kia together aimed to sell 8.1 million cars this year but have so far sold only 5.6 million, raising questions over its growth prospects. 

Fallout from the Hyundai strikes, coupled with Samsung’s recall of the Galaxy Note 7 last month, took a toll on the South’s economy, which grew at the slowest pace in more than a year in the third quarter.