Kia Motors Q1 profit grows 4.6 %

Kia Motors Corp., South Korea's second-largest automaker, said Wednesday that its first-quarter net profit increased 4.6 percent from a year earlier, driven by strong demand for its SUVs and newly-launched models.

Net income came to 944.6 billion won (US$822.7 million) during the January-March period compared with a profit of 903.2 billion won a year earlier, the company said in a regulatory filing.

Operating income also jumped 23.8 percent on-year to 633.6 billion won and sales rose 13.2 percent to 12.65 trillion won, it said.

Its first-quarter earnings were much higher than the market consensus. Major brokerages predicted a net profit of 590.5 billion won in a poll conducted by Yonhap Infomax, the financial news arm of Yonhap News Agency.

"The won's descent against the dollar, impact from newly-launched models such as the Sportage and K7 and expanded sales of our recreational vehicles were behind the marked improvement in profit," the company said in an emailed press release.

The better-than-expected earnings pushed the shares of Kia Motors higher from a weak start. They traded at 49,850 won as of 10:13 a.m., up 0.2 percent from the previous day.

Demand slumped much in China and other emerging markets, but Kia Motors said that its relatively brisk performance in the U.S. and Europe helped offset much of the drop. Its global sales in the first quarter edged down 0.7 percent on-year.

2017 Kia Sportage

Such SUVs as the Soul, Carnival and Sportage led the sales in the U.S., while the all-new Sportage played a major role in Europe, the company said. In China, however, the automaker suffered a setback, with its first-quarter sales dropping 12.7 percent from a year earlier.

Kia Motors' domestic sales here, meanwhile, expanded 11.4 percent as its SUVs such as the Carnival and Sportage were among popular models.

Aided by strong sales of high-margin vehicles coupled with favorable currency market conditions, Kia Motors saw its operating profit ratio rise to 5 percent in the first quarter, up 0.4 percentage points from a year earlier.

Kia Motors still remained cautious in its projection of market outlooks down the road, citing fierce competition and volatile market situations.

The overall profitability, however, will likely improve further as the Sportage SUV will be launched in more foreign countries while such new models as the K7 and the Niro hybrid SUV will result in a hike in demand.

Kia Motors also hopes that its auto plant in Mexico to be launched next month will strengthen its foothold in Central and South American countries.

"Kia Motors will continue efforts to raise its brand recognition with products with competitive edge and quality, while at the same time focusing on improving profitability through stable management," the company said.

Source