Hyundai Motor dives 6% on wage lawsuit fear
Shares in Hyundai Motor Co slumped by more than 6% today to their lowest since August 2011 after a report said the South Korean firm could face billions of dollars in extra wage costs as a result of labour litigation.autos Updated: Apr 19, 2013 07:57 IST
Shares in Hyundai Motor Co slumped by more than 6% on Friday to their lowest since August 2011 after a report said the South Korean firm could face billions of dollars in extra wage costs as a result of labour litigation.
The report in the Korea Economic Daily further soured sentiment already damaged by repeated weekend production stoppages at Hyundai's South Korean factories which have reduced its sales and earnings.
The newspaper said Hyundai Motor and its affiliates Kia Motors Corp and Hyundai Mobis Co Ltd
could face as much as 7 trillion won ($6.23 billion) in additional labour costs should they lose wage lawsuits with South Korean unions.
A Hyundai Motor spokeswoman declined to comment. "The report has sparked uncertainty about Hyundai's future labour costs, leading to panic-selling," said Shin Jung-kwan, an analyst at KB Investment & Securities.
Hyundai Motor's labour union is likely to continue to refuse work this weekend, a union spokesman told Reuters, after it and the company failed to reach agreement on wages under a new shift system that came into force in March.
Hyundai Motor's South Korean plants, its biggest production base, suffered from output stoppages during weekends in March and April that led to lost production worth 820 billion Korean won ($731.72 million).
The stoppages will hurt Hyundai's first-quarter earnings, which are due to be released on Thursday, analysts said. Shares in Hyundai Motor trimmed losses to trade down 3.7% by 0159 GMT, while Kia shares were down 2.3% and Hyundai Mobis dropped 1.9%. ($1 = 1123.7000 Korean won)