Kia sees fall in Q4 profit on stronger won

Kia Motors Corp., South Korea’s second-largest automaker, said Friday that its 2012 earnings climbed 9.8 percent from a year earlier thanks to steady sales in overseas markets.

Net profit reached 3.86 trillion won ($3.6 billion) last year, compared with 3.52 trillion won for a year earlier, the company said in a regulatory filing.

Sales rose 9.4 percent on-year to 47.2 trillion won in 2012, and operating profit also climbed 0.7 percent to 3.5 trillion won.

For the fourth quarter of last year, Kia’s sales inched up 2.9 percent on-year to 11.3 trillion won, while operating profit plunged 51.1 percent to 404.2 billion won. Its net profit dipped 6.7 percent to 737.5 billion won over the October-December period.

“We expect the world’s car makers to continue to struggle in 2013, but we will redouble our efforts to raise our brand image and strengthen quality management to tide over the unfavorable environment,” said Kia Motors in a separate statement.

Kia Motors said its growth slowed down last year compared to a year earlier, due mainly to a strengthening won. Kia posted a 30 percent surge in net profit for 2011 and its sales jumped 20 percent on-year.

The carmaker also cited a supply shortage due to temporary production stoppages caused by a labor strike in the summer and the expansion of a local plant.

In order to deal with its worsened profitability due to the strong won, Kia is considering raising prices of its vehicles shipped overseas, an official said.

“We are carefully mulling over an increase in export prices, but we are going about the plan deliberately as it affects exports,” said Park Han-woo, Kia’s chief financial officer, in a conference call.

He also said that Kia had to pay about 200 billion won in compensation for its mileage overstatement in the United States.

Kia’s global sales rose 9.3 percent on-year to 2.7 million vehicles last year, with 481,000 units sold in the domestic market and 2.2 million units sold outside of South Korea.

Its domestic sales shrank 2.2 percent on-year, while the country’s market as a whole contracted 4.2 percent from a year earlier to 1.4 million vehicles due to low local demand.

However, Kia was on a roll abroad on the back of its popular models including the Optima sedan and the Cee’d to make up for the domestic losses. In the United States, it sold 558,000 vehicles, up 14.9 percent, with a share of 3.8 percent. Its Europe sales jumped 14.5 percent on-year to 332,000 units, and its China sales rose 11.1 percent to reach 481,000 vehicles.

Its production at its overseas plants jumped 18.2 percent to 1.1 million vehicles, while 1.6 million units were produced at its local plants.

Kia said it set a conservative sales target for 2013 due to a delayed recovery in the world economy and the yen’s steep depreciation against the U.S. dollar. It is seeking to sell 2.75 million vehicles this year, up 1.3 percent from a year earlier. (Yonhap News)