Kia reports increase in net profit for 2022, all-time high operating profit, sales

Kia headquarters building in Seocho District, southern Seoul [YONHAP]

Kia reported a 13.6 percent increase in net profit for 2022, and an all-time high operating profit and sales, pushed up by lower dealership incentives and the strong dollar.

The carmaker logged a net profit of 5.41 trillion won ($4.4 billion) for 2022, up 13.6 percent on year, according to its annual report Friday.

The figure was below the analyst forecast of 5.43 trillion won compiled by FnGuide.

The annual sales and operating profit both marked records.

Kia's yearly operating profit rose 42.8 percent to 7.23 trillion won and beat the market expectation of 6.69 trillion won. It is the first time for Kia's operating profit to surpass the 7 trillion won mark.

Sales stood at 86.56 trillion won, up 23.9 percent year on year, and below the market expectation of 86.72 trillion won.

Despite high raw material costs and an auto chip shortage in the first half, strong global demand, lower dealership incentives — which is the money paid to dealers to boost sales — and a favorable currency situation pushed up the bottom line, according to Kia.

“The production loss caused by chip supply disruption was significant,” said Joo Woo-jeong, chief finance officer (CFO) at Kia, during a conference call Friday.

"Though the auto chip shortage still remains an obstacle in short term, the efficient incentive strategy and favorable currency situation has boosted the performance," said Joo.

The high exchange rate has led to an additional 2.4 trillion won in operating profit, and dealership incentive cuts added another 1.5 trillion won.

As incentives are paid to dealers to encourage sales when demand is weak, low levels of inventories reduced dealership incentives.

In 2022, Kia sold 2.9 million vehicles, up 12.7 percent on year. Of them, 81.4 percent were overseas sales.

Sales of eco-friendly vehicles, including hybrids, rose 54.8 percent to 487,000 units.

For the fourth quarter, Kia logged a net profit of 2.04 trillion won, up 63.2 percent on year, propelled by strong demand for high-margin cars and a favorable currency situation.

Joo said that “this year’s going to be tough,” citing rising uncertainties driven by recession concerns, rate hikes and the resulting decline in demand.

But the CFO added that “the demand still remains strong so far,” and said that Kia will focus on boosting sales of high-margin SUVs and eco-friendly cars.

Hyundai Motor also reported a record performance for 2022 on Thursday. Its annual net profit jumped 40.2 percent on year to 7.98 trillion won, and operating profit came in at an all-time high of 9.8 trillion won, up 47 percent on year.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]