Good Q1 for Kia, auto parts companies, steelmaker, builder

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Good Q1 for Kia, auto parts companies, steelmaker, builder

Korean companies have generally posted solid first-quarter performances compared to a year ago as sales rose despite an unfavorable currency exchange rate.

Data released by the Bank of Korea on Thursday showed that Korea’s GDP grew 0.9 percent in the first quarter compared with the fourth quarter last year, largely boosted by growth in the manufacturing sector, which increased production by 2.1 percent over the previous quarter.

Although the situation differs for each company, many in the manufacturing sector that released first-quarter performances yesterday also showed year-on-year sales and operating profits rising.

Kia Motors, Korea’s second-largest automaker, said yesterday in a regulatory filing that its first-quarter operating profit rose 4.5 percent year-on-year to 735.6 billion won ($707 million), while sales climbed to 11.92 trillion won, a 7.6 percent increase from a year ago.

Its net profit for the first quarter also jumped 11.8 percent over last year to 876.3 billion won.

“Although the average won-dollar exchange rate wasn’t favorable to us, our vehicle sales rose sharply compared to a year ago and an increase in the average unit price of exports led the profit increase,” Kia said in a statement.

The affiliate of Hyundai Motor Group said it sold 771,870 cars in the first three months of 2014, up 9.9 percent, or 69,675 units, year-on-year.

Hyundai Mobis, the country’s largest auto parts maker that is also under the Hyundai Motor Group, said its operating profit soared 13.6 percent to 721 billion won in the January to March period, while its sales rose a solid 10 percent to 8.92 trillion won in the same period.

“Sales increased due to an increase in production by automakers, including Hyundai and Kia, and the rising demand for auto parts for seasonal repairs,” the company said in a release. “However, in the financial sector, the profits went down to establish infrastructure for business growth.”

Mando, the nation’s second-largest auto parts manufacturer, also saw sales and operating profits rise. The company made 1.42 trillion won in sales, up 4.2 percent from a year ago, while operating profit gained 4 percent year-on-year to 85.3 billion won.

Hyundai Steel, Korea’s second-largest steelmaker, was a top performer in the first quarter. The company’s operating profit reached 233.2 billion won, rising 91.7 percent when compared with a year ago, while sales rose 41.6 percent year-on-year to 3.9 trillion won in the first three months.

In the slumping construction industry, Korea’s largest builder, Hyundai Engineering and Construction, was an exception as its sales advanced 15 percent year-on-year to 3.29 trillion won and its operating profit jumped 5 percent to 187.7 billion won as its construction projects in Kuwait and Vietnam started to generate money.

But some companies had less positive first quarters.

SK Innovation, the holding company of Korea’s top oil refiner SK Energy, said that its operating profit was down to 226.2 billion won in the first quarter, a decrease of 67.5 percent year-on-year, while sales plunged 6.7 percent to 16.89 trillion won. Net profit dipped 64.1 percent to 97.58 billion won.

SK Innovation cited a refining margin decrease and lower demand for its aromatic products and decreased sales of olefin products.

Samsung Heavy Industries, a major shipbuilder under Samsung Group, was in the red for this quarter after the company decided to include possible losses on the financial sheet.

The shipbuilder said that it posted 3.43 trillion won of sales in the first quarter, down 11.7 percent, while incurring an operating loss of 362.5 billion won.

BY joo kyung-don [kjoo@joongang.co.kr]

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