Production trouble sees Hyundai third quarter profits dip

Hyundai, South Korea's biggest carmaker, posted operating profit that missed estimates after labour strikes hurt production at home and incentive spending in the US increased.

Operating profit fell to 1.02 trillion won (€814 million) in the three months ending December 31st, down from 1.52 trillion won a year earlier, the Seoul-based company said on Wednesday.

That compares with the 1.45 trillion won average of 20 analysts' estimates compiled by Bloomberg.

Hyundai Motor's deliveries in South Korea plunged in the quarter after a series of partial stoppages escalated into a full-scale strike in September and the expiry of a tax cut damped demand.

The company's spending on incentives in the US, its second-biggest market, increased at a faster pace than the industry average, according to researcher Autodata.

Rebound

Hyundai and affiliate Kia have forecast a rebound in sales this year as they count on new factories in China and Mexico to boost output.

Those projections were made before US president Donald Trump assumed office. Since his inauguration, Mr Trump has withdrawn the US from the Trans-Pacific Partnership trade accord, reaffirmed a campaign promise to renegotiate the North American Free Trade Agreement involving Mexico, and met carmakers to persuade them to keep production within the US.

Hyundai and Kia this month joined a growing list of carmakers announcing investments in the US as they respond to pressure from Mr Trump to create jobs.

The carmaker’s incentive spending in the US climbed 31 per cent last month from a year earlier, compared with the average 23 per cent increase for the industry, according to Autodata.

– (Bloomberg)