Kia Motors Corp., South Korea’s second-largest automaker, said Friday its first-quarter net profit rose slightly thanks to earnings from equity investment and other extra profit.
Net income came to 903.2 billion won ($835.9 million) during the January-March period, up 3.1 percent from the 876.3 billion won reported a year earlier, the company said in a regulatory filing.
Operating profit, however, plunged 30.5 percent on-year to 511.6 billion won and sales also shrank 6.3 percent to 11.18 trillion won.
The first-quarter net beats the median estimate of 718.3 billion won from a poll of 21 brokerages conducted by Yonhap Infomax, the financial news arm of Yonhap News Agency. Operating profit missed the consensus estimated at 529.4 billion won.
Kia Motors’ shares rose 2.42 percent to close at 50,700 won on the Seoul bourse.
Kia Motors, an affiliate of market leader Hyundai Motor Co., said it sold 751,080 vehicles at home and abroad during the first quarter, down 2.7 percent, or 20,790 units, from a year earlier.
“Worsening currency situations, such as the falls in Russia’s ruble and the euro, hurt our profitability,” the company said in a press release. “Still, we could defend the profitability to some extent thanks to sales growth in major foreign markets and the expanded ratio of high-margin models.”
Kia Motors’ shares traded 2.42 percent higher at 50,700 won as of 10:44 a.m. on the Seoul bourse.
A plunge in the Russian ruble and its unstable economic situations have forced major carmakers either to suspend or close their operation there, taking a heavy toll on their overseas sales.
Hyundai Motor, South Korea’s largest automaker, reported lower-than-expected earnings Thursday, citing a fall in sales in emerging markets, including Russia.
Kia Motors said that its Russia sales plunged 22.8 percent on-year in the first quarter, while sales in Eastern Europe and Turkey dropped 11.8 percent over the cited period. Its shipments to Latin America also shrank 11.8 percent.
Sales in China, meanwhile, grew 3 percent on-year during the first quarter, but they still underperformed the overall growth in the country. The U.S market was among a few nations where the company outdid the market average growth by posting a 6.1 percent hike in sales.
Kia Motors painted a gloomy picture for its outlook in the near future, saying that the unfavorable business conditions in those emerging markets will likely remain in place for the time being. An intensifying global competition was also cited as a downside factor.
But some company officials expressed hope that the current situation will not become worse, and may even show some indications of improvement.
“The Russian ruble seems to be showing some signs of stabilization as global oil prices bounced back,” said Han Chun-soo, Kia Motors’ chief financial officer. “The currency’s exchange rate against the Korean won in April has gone up about 17 percent compared to the first quarter, so we expect supply management in Russia to go more smoothly down the road.”
The automaker is pinning its hopes on its flagship models, such as the Carnival and Sorento, which it expects will remain popular in foreign markets.
It also said that new models to be launched in the coming months, including the latest versions of the K5 mid-size sedan and Sportage SUV, will help the automaker post sound results.
“The new K5 will be released in the global market after its initial launch in South Korea in the third quarter, and we aim to sell an annual 400,000 units worldwide,” Han said. “We anticipate the model to help push up the company’s overall sales and profitability.”
“Things will remain tough even into the second quarter,”
another company official said. “Kia Motors will focus more on enhancing its brand recognition with more competitiveness and products and more stable quality, while seeking to improve our profitability through efficient business management.” (Yonhap)
