Kia operating profit dipped 10% last year

Kia Motors, the nation’s second-largest automaker, saw its operating profit plunge nearly 10 percent in 2013 due to the unfavorable exchange rate.

The company said in a regulatory filing yesterday that its operating profit last year was 3.17 trillion won ($2.9 billion), down 9.8 percent from a year ago. Net profit fell 1.2 percent on-year to 3.81 trillion won.

Revenues increased 0.8 percent on-year to 47.59 trillion won in 2013 due to rising sales overseas and the launch of the K7 full size sedan in the North American market, according to Kia.

The nearly 10 percent drop in Kia’s operating profit was worse than its bigger affiliate, Hyundai Motor, which announced on Thursday that its operating slipped 1.5 percent on-year in 2013. Industry analysts said Kia relies more on domestic production, making it more vulnerable to exchange rate woes as the won strengthened.

“The won-dollar exchange rate fell sharply by 51 won on average in the fourth quarter and there was a temporary rise in inventories,” said Joo Woo-jeong, Kia’s financial director. “If the strong won situation continues, we might consider raising prices on our exports.”

For the fourth quarter of 2013, Kia posted sales of 11.76 trillion won, up 4.3 percent from a year before. Operating profit was 650.2 billion won, which was a 60.8 percent increase from a year earlier, but this was mainly due to a “base effect” since allowances to cover recalls were accounted for in its 2012 fourth quarter, Kia said.

The automaker sold 2.82 million vehicles worldwide last year, up 4 percent from 2012. For this year, the company aims to increase worldwide sales by 4.7 percent to 2.96 million vehicles.

By region, Kia wants to sell 585,000 units in the United States, up 9.3 percent from last year, and grow by 1.1 percent to 342,000 units in Europe.

In Europe, the automaker plans to release the Sportage and a new Soul model in the first quarter, the Soul EV in the third and a new Sorento in the fourth. In the U.S., it aims to spiff up its brand image with its flagship K900 sedan and increase sales with the new Soul and Carnival minivan.

Kia also wants to grow bigger in world’s largest auto market, China. The company aims to sell 630,000 units there, up 15.3 percent from last year. The automaker’s third plant in Yenching, China will begin operations in the first half of this year.

BY JOO KYUNG-DON [kjoo@joongang.co.kr]