Hyundai Motor Co.’s earnings fell short of estimates after worker strikes in South Korea hurt output and a stronger won weakened its competitiveness amid tepid demand in the U.S. and China.
profit fell to 775 billion won ($731 million), the Seoul, South Korea-based company said in a statement Thursday. That compares with the 1.12 trillion-won average of 22 analyst estimates compiled by Bloomberg.
The automaker, which missed its vehicle sales target for three consecutive years, said global demand growth is likely to remain low in 2018. Employees stayed away from work over wages, with the labor action stretching into mid-January. Among Asian currencies, the won strengthened the most against the dollar and yen in the fourth quarter, undermining Hyundai’s competitiveness with Japanese automakers like Toyota Motor Corp. and eroding the value of its earnings when converted to won.
“The earnings slump is likely to continue in the first quarter due to the strengthening won and the weak production at home and the U.S.,” Esther Yim, an analyst at Samsung Securities in Seoul, said by phone before the earnings. “Hyundai may start recovering in the second quarter, helped by new models and a rebound in demand in China.”
Shares of the company fell as much as 1.6 percent on Thursday in Seoul.
Sales Drop
In the three months through December, Hyundai’s sales dropped 19 percent in China and 7 percent in the U.S. The won gained about 7 percent against the dollar and yen over the same period, data compiled by Bloomberg show.
To recapture buyers in the U.S. who have shunned its sedans and compact cars, Hyundai has said it will bring eight new or redesigned crossovers or SUVs by 2020. New models coming to the U.S. will include a compact Kona SUV and updated Santa Fe and Tucson models.
Other highlights:
Pays year-end dividend of 3,000 won
Fourth-quarter operating profit compares with 1.02 trillion won a year ago
Sales in the period was 24.5 trillion won; est. 24.1 trillion won
Total vehicle sales in 2018 expected to rise 3.7% to 4.68 million units
Sales in emerging markets and South Korea offset weak U.S. sales
— With assistance by Shinhye Kang