Hyundai's profit falls 31 percent

Hyundai Motor said Thursday that fourth-quarter net profit slumped 31 percent due to weakness in the share price of affiliate Kia Motors, though the company still boasted of a strong performance in 2007 as annual sales hit a record.

Hyundai Motor Co., South Korea's largest automaker, earned 338 billion won ($356 million) in the three months ended Dec. 31, the company said in a statement. Hyundai posted net profit of 486.8 billion won in the same quarter a year earlier.

Jake Jang, a Hyundai spokesman, said losses related to the company's stake in Kia Motors Corp. and higher corporate taxes were responsible for the steep fall.

Hyundai owns 38.6 percent of Kia, South Korea's second largest automaker. Together, they form the world's sixth-largest auto group. Kia's share price was about 25 percent lower at the end of in the fourth quarter of 2007 compared to the end of 2006.

Hyundai's quarterly result was worse then expected. The average estimate of eight analysts surveyed by Dow Jones Newswires forecast that Hyundai would post fourth-quarter net profit of 517.48 billion won ($544.9 million).

Sales during the quarter rose 15 percent to 8.74 trillion won ($9.2 billion) from 7.58 trillion won a year earlier, slightly better than analysts had forecast.

Despite the weaker quarter, Hyundai expressed satisfaction with its overall performance in 2007.

The company recorded annual sales of 30.49 trillion won ($32.12 billion), 11.5 percent higher than 2006 and the first time the figure had ever surpassed 30 trillion won.

Net profit for the year rose 10 percent to 1.68 trillion won ($1.77 billion) during 2007.

Hyundai said it "recorded the best management performance since its foundation 40 years ago through the conclusion of a collective wage agreement without a strike, continued cost-reduction efforts and successful development of new markets in Africa, the Middle East and Russia."

Hyundai, long beset by labor troubles, concluded a wage agreement last year for the first time without its unionized workers going on strike during the negotiations.

Hyundai expressed confidence about 2008, saying the effects of a possible global economic downturn and higher oil prices can be overcome.

"This year, Hyundai Motor will break through the negative external environment ... with the release of new cars, such as the Genesis, and cost-reduction efforts," it said.

Hyundai has high hopes for the Genesis, a luxury car it sees as taking on European and Japanese rivals. The rear-wheel drive vehicle made its debut in South Korea this month and is due to hit showrooms in the United States in June.

Shares in Hyundai, which released earnings results before the stock market closed, rose 2.6 percent to finish at $75.

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AP Writer Jae-Soon Chang in Seoul contributed to this report.