Kia Motors Corp. rose in Seoul trading after it reached a tentative wage deal with its workers, preventing a strike for the second consecutive year. The company is the second largest vehicle manufacturer in South Korea.
It is set to join Ssangyong Motor Co. and GM Korea Co. in obtaining agreements with workers on wage increases for 2011 before the summer break of the industry begins at the end of this month.
GM Korea has agreed to increase the base salary by 4.7 percent and provide a record bonus after the vehicle manufacturer posted its first annual profit since 2007.
Analyst Suh Sung Moon at Korea Investment & Securities Co., who rates the company's stock a "buy," stated in a note to investors that avoiding a strike is especially positive while the company has low inventory to meet demand and Japanese rivals are normalizing output rapidly after the earthquake.
The wage agreement includes a 5.2 percent increase in monthly salary, a yearly bonus equivalent to three months' pay as well as an additional 7 million won ($6,662).
The workers will also receive 80 Kia shares each. The deal is subject to a vote by workers on July 27. Hyundai Motor Co., which owns 34 percent of Kia and the largest vehicle manufacturer in the country, is still discussing working conditions and wages with employees.
The sales of Kia for the first half of the year increased 25 percent to 1.24 million vehicle units from the same period last year as it sold 30 percent more overseas, the company stated last July 1. Shares of Kia advanced 2.5 percent to 76,900 won as of 1 p.m. on the Korea Exchange versus the benchmark Kospi index gain of 1 percent.