For the 11th quarter in a row, South Korean automaker Hyundai Motors has reported a decline in profits, impaired by weakening sales and labor strikes in its home country.
The automaker, together with sister company KIA Motors Corp., reported on Wednesday that operating profit for the quarter ended Sept. 30 slid to 1.07 trillion won ($943 million). That was a drop of about 29 percent. The figure missed average estimate of 1.22 trillion by analysts polled by Bloomberg.
Net profit for the quarter also missed analysts’ estimates, slumping for the 11th straight quarter. It declined by roughly 10 percent to 1.06 trillion won ($935 million), compared to analysts’ expectations of around 1. 3 trillion won in a survey by Reuters.
Earnings for the period were the least since the largest South Korean car maker started implementing international financial reporting standards in the first quarter of 2010, according to Fox News.
Following a number of work stoppages that began in July, the world’s fifth-largest automaker was hurt by its first full-scale labor strike over wage issues last month. The work interruption cost the Korean company around 140,000 vehicles, the value of which is estimated at roughly 3 trillion won.
An agreement was reached between Hyundai management and its workers’ union earlier this month to resolve what has been described as the automaker’s worst-ever labor face-off in South Korea.
The effect of the labor dispute was compounded by declining vehicle sales, both home and abroad. Hyundai said sales during the quarter dropped to 22.1 trillion won ($19.5 billion), a fall of 8 percent. Sales during the first nine months of 2016 dropped 2 percent from a year earlier.
The Seoul-based company said it expects hard times ahead in both advanced and emerging markets. This contributed to its announcement Tuesday that around 1,000 executives will see a 10 percent reduction in their pay, starting from this month.
Deliveries declined in South Korea and Hyundai’s second-biggest market, United States, by 19 percent and 12 percent respectively. However, sales in the automaker’s biggest market, China, rose 20 percent.
Demand in South Korea has been especially weakened by the expiration of tax breaks on new vehicle purchase back in June.
Overall, Hyundai said global shipments during the third quarter slumped to 1.085 million vehicles, a fall of 3 percent from the same period a year ago.
Shares of the company were down almost 2 percent following the announcement of the quarterly results.
A stronger domestic currency contributed to reduce the value of earnings from abroad. The Korean won has appreciated by more than 7 percent against the American dollar during the 12-month period ended September. This has also hurt the company’s competitiveness in the global market.
HI Investment & Securities Co. Koh Tae-bong told Bloomberg that Hyundai will move to improve sales by making new vehicle models available in 2017.
Hyundai expects current business uncertainty to persist for sometime due to a slowdown in developed markets and a decline in emerging markets.
The automaker replaced the heads of its China and South Korean operations earlier in the month as part of a move to guard against further market-share losses in the major markets.