Hyundai Motor announces quarterly profits fall 11%
Korean auto maker Hyundai Motor reported an 11% decline in its second quarter profits citing higher steel prices, marketing costs, and weak domestic demand.
Total sales increased to Won 7.2 trillion ($6.16 billion) from Won 6.6 trillion ($5.65 billion) in the same period last year. The company reported strong exports to
China and
Europe led overall sales in the second quarter.
Hyundai earned a net profit of Won 510 billion ($437 million) for the quarter ending on June 30 2004, slightly down compared to the Won 570.9 billion ($489 million) profit recorded in the same quarter last year. The company stated that rising global steel prices, which rose 14% in the first half of this year, had a major impact on their declining profits, especially considering that steel comprises 7% of Hyundai's total material costs.
Earlier this month, after a 5-day strike, unionized workers at Hyundai agreed to accept a pay increase of over 6% and a one-time bonus, which analysts state will increase labor costs by 13.8%. Analysts are also concerned that Hyundai Motor may be obligated to support its sibling firm INI Steel's takeover of bankrupt Hanbo Steel. However, officials from Hyundai have said that the company has no plans to get involved in the takeover.