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Last Updated: Monday, 7 August 2006, 06:55 GMT 07:55 UK
Currency woes hit Hyundai profits
Hyundai factory in Ulsan, South Korea
Hyundai staff are back at work after a month-long strike
Hyundai Motor Company has suffered a slump in second-quarter profits after the value of its exports was hit by the strength of the South Korean won.

The firm, which was hit by a month-long strike earlier this summer, reported profits down 37% at 387.3bn won ($401.6m; 210.6m) over the period.

The strong won made Hyundai exports - which account for about 60% of its overall sales - more expensive.

But Hyundai shares rose as investors said the won's impact may have peaked.

The company is embroiled in a bribery and embezzlement scandal which has seen a number of top executives charged.

Chairman Chung Mong-Koo, accused of using company money to win political favours, appeared in court on Monday.

Strike impact

Hyundai's results were worse than expected, with exports falling nearly 9% and domestic sales slipping 1.8%.

The stronger the won, the lower the profits the firm makes when its overseas earnings are converted back into domestic currency.

Although the earnings weren't that good, some investors now think the worst is over
Choi Dai-Shik, CJ Investment & Securities.

Hyundai has ambitious growth plans, with its eye set on becoming one of the world's six largest car firms by 2010.

But its business - like many of Korea's leading companies - has been dogged by industrial relations problems.

A month-long pay dispute which ended late last month is expected to cost the firm $1.3bn in lost production.

Analysts said the strike would harm the firm's second-half performance but added that the currency situation should improve.

"Although the earnings weren't that good, the results were already priced in and some investors now think the worst is over, boosting Hyundai's shares," said Choi Dai-Shik, from CJ Investment & Securities.

Currency difficulties also hit profits at Hyundai-owned Kia Motors.

The firm saw its profits fall to $46m from $154m in the corresponding period last year, despite a 5% increase in sales.



SEE ALSO
Hyundai workers walk out over pay
26 Jun 06 |  Business
Hyundai chairman Chung indicted
16 May 06 |  Business
Hyundai boss arrested in S Korea
28 Apr 06 |  Business

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