South Korean car manufacturer Kia released its earnings report for the second quarter on Monday, announcing a plunge in net profit as it heads into union negotiations.

South Korea’s second largest car company earned $46 million in the quarter which ended June 30, down 70 percent from the previous year while sales rose 5 percent to US$4.6 billion. Analysts were expecting a net profit of $98 million, according to research firm Thomson Financial. During the second quarter the firm’s sales decreased 2.5 percent to 293,502 vehicles.

One significant factor affecting the carmaker’s bottom line was the appreciation of the won. Its appreciation against foreign currencies shrunk the value of overseas profits.

Compounding this situation was labour unrest within the firm. Unionized workers, who are beginning a round of negotiations with the company, are demanding a 7.1 percent raise in basic pay and better working conditions. The company has said it is difficult to accept the demands, citing weak earnings.