Hyundai Motor shares take a dive on profit concerns image

South Korea’s biggest carmaker, Hyundai Motor, has seen its shares in a steep dive ever since announcing a record $10 billion deal to acquire a prized land plot in Seoul’s Gangnam business district.

Now, investors have become increasingly concerned that more spending associated with the land buy, worker salary negotiations and rising internal currency could impact negatively the company’s third-quarter profit and fall under analyst estimates. Consequently, the shares plummeted to their lowest level over the last four years, with Hyundai trading 4.2 % lower at 160,000 won in Seoul. The drop was of almost 5.75 before the close, putting the stock on par to the level last seen back in October 2010, while the benchmark Kospi index rose 0.9%.

Nam Kyeong Moon, an analyst at Yuanta Securities Korea said that Seoul-based Hyundai might fail to meet analyst forecasts when it’s going to report third-quarter earnings tomorrow. The situation is due to worker strikes in South Korea and the strong local currency, which negatively impacts profits made from exporting cars. The partial strikes in South Korea in August cost the company around 900 billion won in lost output.

According to a Bloomberg-compiled average estimate of 28 analysts, Hyundai’s third-quarter operating profit (sales minus goods and administrative costs) could be in the 1.81 trillion won ($1.71 billion) range.

Via Bloomberg