Hyundai Motor’s Net Off 38%; Scandal and Currency Moves Cited May 4, 2006
SEOUL, South Korea, Thursday, May 4 (Bloomberg News) ? The Hyundai Motor Company, whose chairman, Chung Mong Koo, was arrested last week in a bribery investigation, reported on Thursday that first-quarter net income fell a greater-than-expected 38 percent because gains in the won eroded the value of its overseas sales.
Net income declined to 318.8 billion won ($340 million) compared with 509.8 billion won a year earlier, the company reported. Operating profit rose 4 percent, to 335.3 billion won, from 322.7 billion won while sales climbed 11 percent, to 6.86 trillion won, from 6.17 trillion won.
Declining earnings and the investigation of Mr. Chung, 68, and his son, Chung Eui Sun, who is chief executive of the Kia Motors Corporation, have wiped more than $8 billion off the market value of companies in their industrial group this year.
Profit may decline this quarter as Hyundai and Kia reported double-digit declines in unit sales last month from March and the won is trading at its highest in eight and a half years, eroding overseas earnings.
“It’s likely to get worse before it gets better, because of the Hyundai Motor chairman’s arrest,” said Suh Sung Moon, an analyst at Korea Investment and Securities in Seoul. “Operations are already being hampered by his absence, and it may last for some time.”
Mr. Chung was arrested last week and accused of misusing 300 billion won of company money and embezzling 100 billion won to bribe government and banking officials, according to a ruling at the Seoul Central District Court. Mr. Chung denied most of the allegations, his lawyer Kim Jae Jin, said.
The investigation is hurting overseas expansion plans that the group is counting on to drive growth.
- Posted in : Uncategorized, Hyundai
- Author : arnold
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