Kia Motors Q1 OP up 56% on qtr, almost doubles on yr

Mirroring its bigger sibling Hyundai Motor, Korea’s second largest automaker Kia Motors Corp. pulled off a staggering turnaround in the first quarter with its operating profit almost doubled from a year ago led by a fleet of new models and stable management after settlement of wage dispute.

The company in a regulatory filing on Thursday said its consolidated operating profit for the quarter ended March reached 594.1 billion won ($513 million), up 55.5 percent from three months ago and 94.4 percent from a year ago. Its net profit soared 588 percent on quarter and 50 percent on year to 649.1 billion won.

The profit surge largely owed to the readjusted income statement as half of loss reserves set aside for extra wage payments was reflected back after the management and labor representatives tentatively agreed on the terms of overdue wages last month.

On Thursday, Kia Motors shares ended 3.3 percent lower at 42,450 won in Seoul trading.

Sales, however, fell 7.6 percent on quarter and 0.9 percent on year to 12.44 trillion won due to lackluster demand at home.

Kia Motors sold total 638,913 units from January to March, up 0.5 percent from the previous year. Domestic sales shrank 7.5 percent to 114,482 units, while outbound shipments rose 2.4 percent to 534,431 units during the period. Shipments to the U.S. added 5 percent to 138,259 units on brisk sales of its all-new large-sized SUV Telluride. Sales in Europe were down 2.1 percent to 126,664 units, and China also down 0.3 percent to 81,979 units. Other markets like Latin America, the Middle East and Asia saw a 5.1 percent rise in sales after delivering 187,529 units on higher demand for small-sized models including K3 sedan and Stonic crossover.

Expecting tougher business conditions this year, Kia Motors said it would keep up efforts to achieve its sales goal for this year and improvement in profitability with release of new models and focus on emerging markets. It would go all out to expand the sales volume of new Telluride and Soul crossovers in the U.S., the company added.

Two new SUVs SP2 and Mohave are due to hit the market in the second half of this year, with next-generation K5 and face-lifted K7 sedans for the domestic market.

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