Not so good financials for Hyundai

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http://www.wsj.com/articles/hyundai-reaches-tentative-annual-wage-deal-with-union-1476316350

 

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Here is the article:
EOUL— Hyundai Motor Co. reached a fresh tentative wage deal with its union, following a strike by the auto maker’s workers that has led to billions of dollars in lost production.

“Both the company and the union shared the view that any further work stoppage would seriously damage not just the company but also the national economy,” Hyundai said in a statement.

The agreement is subject to ratification by a vote of union members scheduled for Friday. A Hyundai union spokesman said he expects the workers to approve the deal.

Hyundai’s unionized workers, who account for more than 70% of the company’s 67,000-person domestic labor force, in August rejected this year’s wage pact agreed between their leaders and management, which had offered a smaller increase in compensation than in the previous year’s package, citing worsening business conditions.

Disgruntled workers, who had already been on partial strikes since the middle of July, halted all the assembly lines at the company’s three domestic plants for a day last month, marking their first all-out work stoppage since 2004.

Protracted strikes at Hyundai since July have led to lost production of more than 130,000 vehicles valued at nearly three trillion won ($2.7 billion), according to the company.

Workers usually make up some of the losses with extra work later in the year.

Under the latest deal, Hyundai will increase workers’ basic monthly pay by 72,000 won, give each worker a one-off payment of 3.3 million won and grant bonus and incentive payments worth 3½ times their basic monthly wage. Each worker also will receive 10 Hyundai shares.

Hyundai’s strike action is the latest challenge facing corporate South Korea. Samsung Electronics Co. is reeling from a global recall of its premium Galaxy Note 7 smartphone and Hanjin Shipping Co., the country’s largest shipping line by capacity, is on the brink of collapse after filing for bankruptcy in late August. South Korea’s three shipyards, including industry leader Hyundai Heavy Industries Co., are all under creditor-led debt restructuring.

Hyundai, the world’s fifth-largest auto maker by output when combined with its affiliate Kia Motors Corp., has been hit by strikes in all but four years of the union’s nearly three-decade history, leading to lost production.

Hyundai posted its 10th consecutive decline in quarterly profit in the April-June period, and warned of a tough second half, dimming the outlook for achieving its full-year sales target. Analysts expect earnings to continue to slide.

Nomura analyst Angela Hong forecast Hyundai’s operating profit will fall 18% to 1.2 trillion won from a year ago, its lowest since 2011.

Write to In-Soo Nam at In-Soo.Nam@wsj.com