Kia Motors 3Q profit misses forecasts after strike
SEOUL, South Korea (AP) — Kia Motors Corp. reported a lower-than-forecast profit for the third quarter Friday, as a strike and weak demand in South Korea cut into its earnings.
South Korea's second-biggest carmaker said its July-September profit rose 28 percent over a year earlier to 829 billion won ($755 million). Operating income reached 861 billion won, up 4 percent from a year earlier. Revenue rose 16 percent to 1.16 trillion won.
The third-quarter result missed market forecasts. Analysts expected Kia to post more than 1 trillion won in net profit and operating income according to financial information service provider FnGuide. Kia's shares fell more than 5 percent in Seoul.
Kia's third-quarter net profit declined 24 percent from the previous quarter after a labor strike lowered production by 62,890 cars worth $94 million. Workers at Kia Motors, along with employees at Kia's bigger affiliate Hyundai Motor, staged walkouts starting July demanding higher wages and an end to overnight shifts. Kia and Hyundai both reached an agreement with their labor union in September but vehicle output took a hit.
Despite the labor strike, Kia posted sales growth during the first three quarters of this year. It sold 2.03 million cars between January and September, up 11 percent over a year earlier, it said.
While Hyundai Motor convinced investors that it will be able to outdo its annual sales target by ramping up output during the fourth quarter, Kia's statement showed the smaller carmaker may face challenges in meeting demand.
"The product disruption caused by the labor strike in the third quarter is expected to result in shortages in our inventory level around the world," Kia said.
Overseas sales will be challenged by the weak global economy and the strengthening local currency against the U.S. dollar, which could raise prices of Kia vehicles overseas.