Kia's Q1 net profit slips from year earlier due to chip shortages

Kia, Korea’s second-biggest carmaker, said Monday its first-quarter net profit fell 0.2 percent from a year earlier due to one-off costs amid global chip shortages.

Net profit for the three months that ended in March fell to 1.032 trillion won ($825 million) from 1.035 trillion won during the same period of last year, the company said in a statement.

Particularly high deferred corporate taxes were factored in the bottom line in the first quarter, a company spokesman said over the phone, without giving the value of the taxes.

Vehicle production and sales also declined in the first quarter due to continued semiconductor chip shortages and disrupted supplies of other parts due to the Russia-Ukraine war, the statement said.

In the first three months, Kia’s vehicle sales fell 0.6 percent to 685,739 vehicles, including 564,075 units overseas, it said.

Operating profit jumped 49.2 percent to 1.606 trillion won in the first quarter from 1.076 trillion won a year ago. Sales were up 10.7 percent to 18.357 trillion won from 16.581 trillion won.

Increased sales of high-end environment-friendly models, including the all-electric Niro EV and EV6, in the domestic and European markets propped up the quarterly operating income.

In the January-February period, Kia ranked second just after U.S. electric carmaker Tesla in terms of EV sales in Western Europe, according to market analysis firm JATO Dynamics.

Kia sold a total of 14,269 EVs to account for 8.7 percent of Western Europe’s EV market, following Tesla’s 10 percent, the JATO data showed.

Kia expected continued chip shortages, disrupted parts supplies due to the lockdown in Shanghai, and higher raw materials prices amid the Russia-Ukraine war will remain concerns for carmakers in the second quarter.

Once the chip supplies improve, the company said it will maximize the operation of its plants to meet pent-up demand and boost sales.

Yonhap