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Hyundai Motor logs 15 percent drop in 1Q profit

Thursday - 4/25/2013, 5:32am  ET

A man crosses a road in front of a Hyundai dealership in downtown Seoul, South Korea, Wednesday, April 24, 2013. (AP Photo/Kin Cheung)

AP Business Writer

SEOUL, South Korea (AP) -- Hyundai Motor Co. said Thursday its first quarter net profit fell 15 percent as a labor dispute slowed car production in South Korea.

The country's largest automaker said net profit reached 2.1 trillion won ($1.9 billion) in the January-March period, matching market forecasts. A year earlier, net profit was 2.5 trillion won.

Sales rose 6 percent to 21.4 trillion won. Operating profit declined 11 percent to 1.9 trillion won.

The company blamed its lower profit on declining production at domestic plants, which outweighed increased production from new plants in China and Brazil.

Starting March, Hyundai adopted new schedules for workers to remove overnight shifts but has yet to reach an agreement with its labor union on how to compensate workers for weekend and holiday shifts. The company's Ulsan plant has not produced any vehicles during weekends since March. Exports of locally produced vehicles during the first quarter dropped 11 percent over a year earlier.

The company said it hopes to reach an agreement with the union soon to resume weekend production.

"Once we reach an agreement over the weekend shifts at the Ulsan factory, we will be able to meet our annual sales target," Chief Financial Officer Lee Won-hee said during a conference call with investors. Hyundai is aiming for 6 percent growth in 2013 vehicle sales to 4.66 million units.

Another dent to its bottom line came from foreign exchange rates. Sales costs increased from the local currency's weakness over a year earlier, the company said. Fears of an outbreak of violence on the Korean Peninsula, stemming from North Korea's recent threats, eroded the value of the South Korean won.

Hyundai Motor is the flagship unit of the world's fifth-largest automaker, Hyundai Motor Group.

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