Hyundai Motor reports 15% drop in its profits for Q1 2013

Hyundai Motor has reported a 15% drop in its profits for the first quarter of 2013, after being hit by industrial action and the strength of the won.

The South Korean company’s net profit in the first three month came in at 2.1 trillion Korean won ($1.9 billion) compared with 2.5 trillion in the same period a year ago.

Since January, the Korean won has appreciated by 4.5% against the US dollar.

Industrial action has also hurt Hyundai’s ability to increase capacity.

Analysts said Hyundai had been hurt by the unfavorable exchange rate environment.

The strong won has made Hyundai’s vehicles less price competitive when compared to their Japanese rivals. The yen has depreciated by more than 10% since January giving a boost to Japanese car makers.

In addition, frequent work stoppages by Hyundai’s unionized workers also affected the carmaker’s earnings.

Hyundai’s labor union again refused to work last weekend – the seventh straight weekend of industrial action.

The latest stoppage resulted in production losses of about 50,000 vehicles which would cost the company nearly 1tn Korean won.

The quarterly earnings statement also revealed weak demand in the eurozone market, which led to an 11% drop in annual sales in Q1 2013.