Kia Corp., South Korea’s second-biggest carmaker by sales, said Thursday its fourth-quarter net profit fell 21 percent from a year earlier due to higher costs and the strengthening won.
Net profit for the three months ended in December fell to 1.62 trillion won (US$1.2 billion) from 2.04 trillion won during the same period in 2022, the company said in a statement.
“Increased incentives, unfriendly exchange rates (which means the strengthening won against the dollar) and higher labor costs put a dent on the quarterly results,” a company spokesperson said.
The dollar fell to an average of 1,289.40 won in the fourth quarter from 1,344.80 won a quarter earlier, data from the Bank of Korea showed. A strong won drives down the value of an exporter’s dollar-denominated earnings when converted into the local currency.
Operating profit fell 6 percent to 2.47 trillion won in the December quarter from 2.62 trillion won a year ago. Sales were up 5 percent to 24.33 trillion won from 23.16 trillion won during the sam
e period.
For the whole of 2023, net income jumped 62 percent to 8.78 trillion won from 5.41 trillion won the previous year, helped by an improved product mix, rising average selling prices, and the won’s weakness against the dollar.
Operating profit also soared 61 percent to 11.61 trillion won in 2023 from 7.23 trillion won a year earlier. Sales were up 15 percent to 99.81 trillion won from 86.56 trillion won.
Looking ahead, the maker of Sorento SUVs and K5 sedans said it will continue to add all-electric models to its lineup despite slowing demand for pure electric vehicles, while introducing gasoline hybrid models to prop up sales this year.
“We will flexibly respond to market demands for EVs as they are major models that affect the company’s overall sales and profits. In the short term, we are planning to gradually launch three new all-electric SUVs — EV3, EV4, and EV5 — in the domestic market,” Kia Chief Financial Officer Joo Woo-jeong said in the company’s earnings conference call.
Kia said it wi
ll launch the EV3 compact SUV in the local market this year, with a plan to export the model to its “strategic” West European markets this year.
It plans to launch the EV4 sub-midsized SUV domestically next year. The EV5 sub-midsized SUV was initially launched in China last year and the timeframe for its local launch has yet to be fixed.
When it comes to hybrid models, Kia plans to release the gasoline hybrid versions of the Carnival minivan and the Selton subcompact SUV to compete with Japanese rivals, like Toyota Motor Corp., in Korea.
Expecting those new products will support its earnings, Kia has set its full-year sales and operating profit at 101.1 trillion won and 12 trillion won, respectively, in 2024. It also aims to achieve an operating profit margin of 11.9 percent this year, higher than a record 11.6 percent last year.
To enhance shareholder value, Kia plans to buy back 500 billion won worth of its treasury stocks and cancel half of them in the first half.
If the company achieves its targeted
earnings figures for the January-September period, it will cancel the remainder during the fourth quarter, the company said without giving the target numbers.
On Thursday, Kia shares jumped 5.8 percent to 93,000 won on the stock cancellation plan, far outperforming the broader KOSPI’s 0.03 percent gain.
Source: Yonhap News Agency