South Korea’s second-largest automaker reported profit that failed to meet estimates because of a three-week strike at home that lowered production and a stronger won hit the company’s competitiveness in the US.
Third-quarter net income was up 8.9 % to 903.3 billion won ($850 million) from 829.5 billion won a year earlier, the Seoul-based company said today. A three-week walkout in South Korea led to an estimated 414 billion won loss because of the production cut, while deliveries in the quarter dipped 4.9 % in the U.S., the carmaker’s largest market, according to the company.
“Strikes at home and falling sales in key overseas markets would have had an adverse impact on Kia’s earnings,” Lee Sang Hyun, an analyst at NH Investment & Securities Co., said before the earnings announcement. “The company is expected to make up for the loss from the strikes in the fourth quarter, and will be able to meet the annual target.”
The company’s sales were down 4.9 % in the US market last quarter, while its deliveries were modestly up by 1.5 % in Europe in the July to September quarter. Sales in China climbed 9.8 percent to 131,410 units in the last quarter, trailing behind the market average of a 14 percent increase. Competition is seen as intensifying, because the Japanese automakers recuperate declining sales that began last year after a territorial clash led to violent anti-Japan protests in the world’s biggest auto market.