Hyundai Motor Co. said net profit declined for a fifth straight quarter as sales fell on labor strikes, a stronger South Korean won and intense competition in China.
Hyundai Motor, the world's sixth-largest automaker, said Wednesday that net profit in the first quarter ended March 31 fell 10.2 percent to 307.4 billion won (US$329.22 million; euro242.53 million), down from 342.39 billion won a year earlier, the company said in a statement.
Last year's first-quarter figure was revised up from an initial 318.83 billion won due to changes in South Korean accounting regulations, said Hyundai spokesman Jake Jang.
Quarterly sales declined 2.6 percent to 6.684 trillion won (US$7.16 billion; euro5.27 billion).
The result was worse than expected. The average estimate of 11 analysts surveyed by Dow Jones Newswires forecast that Hyundai would post a net profit of 392.70 billion won (US$421 million; euro310 million).
Labor troubles are a constant headache for Hyundai which, along with affiliate Kia Motors Corp., is aggressively expanding overseas production and aims to become the world's fifth-largest automaker by 2010.
Hyundai's militant labor union has gone on strike every year but one since it was founded in 1987. Last year was Hyundai's worst in terms of worker unrest, when four walkouts cost it 1.64 trillion won (US$1.76 billion; euro1.3 billion) in lost output.
January's series of partial strikes, in which workers laid down tools over 13 days amid a bonus dispute, cost the carmaker 266.8 billion won (US$286 million; euro211 million) or 18,513 vehicles, in production losses, Hyundai said.
Jang said intense competition in the global auto market also cut into Hyundai's sales.
"The typical example is the China market," Jang said. "There's literally a price war among the global automakers. We are not following that trend of severe price reductions."
Hyundai said it sold 79,000 of the vehicles it manufactured in China during the first quarter, down 4.1 percent from the year before. Jang added that Hyundai sold another 4,833 exported vehicles in that market, up 11 percent.
A 3.6 percent decline in the U.S. dollar against the South Korean won also hurt Hyundai's earnings results in the quarter, the company said.
Exports accounted for almost 60 percent of Hyundai's sales in 2006.
A stronger won makes the company's vehicles more expensive overseas and reduces the value of profits earned abroad when converted into the currency.
In a possible sign of better things to come in the second quarter, Hyundai said separately Wednesday that sales in April rose 10 percent from the year before to 225,178 vehicles, driven by strong demand in South Korea.
Unit sales in the first four months of this year totaled 837,402 vehicles, up 1.5 percent from the 825,015 recorded during the corresponding period last year, the automaker said.
Shares in Hyundai, which released earnings results during afternoon trading, rose 3.9 percent to close at 61,600 won (US$66; euro49) after rising as mush as 4.5 percent before the results came out.