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(LEAD) Hyundai Heavy union OKs wage deal amid poor earnings

2018/02/09 18:36

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(ATTN: UPDATES with Q4 earnings; CHANGES headline)

SEOUL, Feb. 9 (Yonhap) -- Thousands of union members at Hyundai Heavy Industries Co. voted in favor of a wage deal with management, the union said Friday, as the company reported poor earnings amid a looming crisis over declining order backlogs.

The union at South Korea's leading shipbuilder said 56.3 percent of the 8,724 members who cast ballots voted in favor of the pact signed by workers and the company.

More than 1,100 union members did not participate in the vote held earlier in the day at the shipyard in Ulsan, an industrial city located about 410 kilometers southeast of Seoul.

The union's endorsement represents a consensus between the union and management that all sides need to quickly resolve wage deals in the face of an uncertain future.

The looming crisis was evident when Hyundai Heavy reported that its net loss widened to 572.3 billion won in the fourth quarter, from 351.8 billion won in the red a year earlier.

The shipyard said in a regulatory filing that its operating losses came to 342.2 billion won in the October-December period, compared with an operating profit of 61.2 billion won from a year earlier.

Sales fell 32.9 percent-on year to 3.48 trillion won in the fourth quarter.

Shares in Hyundai Heavy Industries were down 1.89 percent to 130,000 won, outperforming the broader KOSPI's 1.82 percent loss. The earnings were announced after the local market closed on Friday.

Under the deal, which covers the fiscal years of 2016 and 2017, each Hyundai Heavy worker will receive a month of extra salary plus 1.5 million won (US$1,380) in bonus, with their basic pay frozen for the two years.

For 2017, the company is offering an additional 1.5 million won in cash to encourage workers to ride out the current slowdown in the shipbuilding industry.

They will receive 230 percent of their monthly salary in performance-based pay for the 2016 fiscal year that ended on May 31 and 97 percent for the 2017 fiscal year.

In January, Hyundai Heavy President and CEO Kang Hwan-goo warned of an unprecedented crisis due to declining order backlogs.

The shipbuilder said it aims to achieve 7.98 trillion won in sales this year, a 60 percent decline from a decade ago.