Daewoo Motor reports profit

Over 12,000 workers have been sacked worldwide

The restructuring of bankrupt South Korean Daewoo Motor has paid off for its creditors, if not its workers, after the company reported the first monthly operating profit in three years.

Daewoo Motor, South Korea's third biggest carmaker, said on Wednesday it had an April operating profit of 6.7bn won ($5.1m).

But in the first quarter, Daewoo said it still made an operating loss of 45bn won.

The turnaround in earnings will positively affect the efforts for our viability and sales negotiations with General Motors.

Daewoo statement

"We were able to achieve an operating profit in April due to our restructuring efforts, which led to a 751.8bn won reduction in costs," said Kim Kee-ho, a spokesman for the unlisted carmaker.

Daewoo was ordered by a bankruptcy court in February to lay-off 6,800 workers at home and 6,000 abroad, including 187 in the UK, as part of its restructuring.

There have been violent clashes between Daewoo workers and police in South Korea to protest the lay-offs . The restructuring is designed to make the company a more attractive takeover target.

Takeover moves

"The turnaround in earnings will positively affect the efforts for our viability and sales negotiations with General Motors (GM)," the company said in a statement.

Daewoo workers oppose the takeover by GM

Creditors have been trying to sell Daewoo and related firms since August 1999, when they stepped in to rescue what was then South Korea's second-largest conglomerate.

Since more than half a year Daewoo Motor is negotiating with GM and its partner Fiat about a takeover, after Ford abruptly pulled out of a deal worth $6.9bn last September.

Earlier this week the South Korean minister of commerce, Chang Jae-shik, said he expected the US firm to announce the takeover next month.

The head of the state-owned Korea Development Bank (KDB), Daewoo's main creditor which is leading takeover talks, told parliament last month that GM was seeking tax favours in exchange for any takeover of Daewoo Motor.

Daewoo snapshot

Daewoo Motor was declared bankrupt in November after its parent Daewoo Group collapsed in August 1999 under debts of $80bn.

Kim Woo-Choong is being sought for accounting fraud

An international arrest warrant has been issued for the founder and former chief executive of the bankrupt car manufacturer Daewoo, Kim Woo-Choong.

Mr Kim is being sought for his part in the financial scandal surrounding the collapse of Daewoo and is accused of embezzling billions of dollars from the struggling firm.

The carmaker's liabilities totalled 22.3 trillion won as of the end of last year compared to assets worth 9.1 trillion won.

Daewoo Motor still has an annual production capacity of 1.06m vehicles at home and another 875,000 overseas.