Earnings of Korean automakers Hyundai Motor Co. and Kia Motors Corp. will likely drop for the third quarter of the year due to a slump in local production and weak demand, brokerages said Monday.
Industry leader Hyundai is expected to post 19.24 trillion won ($17.3 billion) in sales for the July-September period, with operating profit of 1.95 trillion won, according to KDB Daewoo Securities Co.
"Its third-quarter sales will likely drop 12.5 percent from the previous quarter, as revenues of local factories fell 22 percent on-quarter," said researchers Park Young-ho and Yoon Tae-shik from the brokerage firm.
They also expect the company's operating profit for the three-month period to slump 21.9 percent from last quarter.
The carmaker's second-quarter sales reached 21.9 trillion won and its operating profit amounted to 2.5 trillion won.
Hyundai experienced frequent strikes by its unionized workers in July and August, with an estimate sales loss of 1.6 trillion won, or 80,000 vehicles.
In the fourth quarter, however, Hyundai will turn around by normalizing production, analysts said.
Hyundai will see 22.4 trillion won in sales and 2.54 trillion won in operating profit for the final three months, they said.
Its smaller affiliate Kia Motors Corp. also had a gloomy earnings outlook for the July-September period, due mainly to production losses at their local plants.
"Kia's third-quarter sales will reach 11.7 trillion won and operating profit will be 899.9 billion won," said Park and Yoon.
The July-September figures represent a 7 percent fall in sales from the second quarter and a 26.2 percent slump in operating profit.
They said the automaker's profit for the whole of 2012 is also forecast to decline 7.4 percent on-year, with its 2013 net income estimate likely to fall 8.3 percent on-year.
Shares of Hyundai and Kia were trading at 224,500 won and 66,800 won, respectively, as of 10:50 a.m., down 1.75 percent and 2.06 percent from the previous session. (Yonhap)