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Hyundai Motor suffers double whammy of weak earnings, labor dispute

2017/08/12 09:58

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SEOUL, Aug. 12 (Yonhap) -- Hyundai Motor Co., South Korea's top automaker, is facing a double whammy of sluggish earnings and a looming labor dispute, which have been sending its stocks lower for couple of weeks, watchers said Saturday.

Hyundai Motor closed 2.07 percent lower at 142,000 won (US$123) on the Seoul bourse on Friday, a sharp fall from its 52-week high of 173,000 won on May 23.

Hyundai, which lost its second spot in terms of market cap on the main bourse to SK hynix Inc. in June, may further slip to the fourth spot in the near future. Top steel maker POSCO, currently the fourth player, has been on a steady rise on the back of sound earnings.

The bearish move came as Hyundai Motor's earnings are hit by sluggish overseas sales, in particular in China. The company faced hurdles in selling cars in China amid prolonged Seoul-Beijing tension over the Terminal High Altitude Area Defense (THAAD) in South Korea.

The carmaker posted an operating profit of 1.3 trillion won in the second quarter, down 24 percent on-year. Its net profit also plunged 48 percent over the cited period to reach 913.6 billion won.

Adding to this is the strike staged by its workers.

Unionized workers at Hyundai Motor staged four-hour strikes on Thursday, with another being slated for Monday. The workers are demanding a monthly wage increase of 155,000 won, and a bonus equal to 30 percent of the company's net profits for 2016. They are also demanding that the company guarantees their employment regardless of future advances in production technology.

"The outlook over Hyundai still remain under cloud, as South Korea decided to install four additional launchers for the THAAD system in response to Pyongyang's launch of intercontinental ballistic missiles," said Jeon Jae-chun, a researcher at Daishin Securities Co.