Home / International News / News detail

Kia posts fourth quarter loss on won, costs

From Reuters| January 29 , 2007 12:45 BJT

Kia Motors Corp. said today it turned to a quarterly loss, hit by a stronger won and higher marketing costs.

Earnings for Kia, the affiliate of Hyundai Motor Co., are expected to improve this year, helped by lower raw material costs and as production ramps up from its recently-opened Slovakia plant, lessening currency-related risk.

Still, many analysts predict Kia will face challenges in 2007 due to heavier spending on marketing and as a firmer won currency will keep putting pressure on the company, which sells about 80 percent of its vehicles abroad.

Sales at home, where Kia has a 23 percent market share, are not expected to pick up any time soon amid sluggish consumer sentiment in Asia's third largest economy and a lack of new models.

Kia reported a net loss of $213,800 (200 million won) in the fourth quarter ended on Dec. 31, compared with a revised 263.7 billion won profit a year earlier when a corporate tax refund boosted earnings by around 80 billion won.

The result widely missed a consensus forecast for $61.1 million (57.5 billion won) in a Reuters poll of seven analysts.

Kia reported a net loss of $46.6 million (43.9 billion won) in the third quarter of 2006.

In the October-December period, Kia posted an operating loss of $58.4 million (55 billion won), compared with an operating profit of 54.1 billion won a year earlier and a revised $94.1 million (88.6 billion won) loss in the third quarter. Analysts expected Kia to report an $19.8 million (18.6 billion won) operating loss.

On Thursday, Jan. 25, Hyundai posted a surprise 8.6 percent drop in quarterly operating profit, hit by a firmer won and weaker sales in a fiercely competitive global market.

The company set a 2007 sales target of $19.44 billion (18.3 trillion won), up 5 percent from last year, and said it would lay out $1.89 billion (1.78 trillion won) in capital expenditure, little changed on the previous year.

The won's value on average rose 8.4 percent in the fourth quarter from a year earlier and gained 1.8 percent from the third quarter, dampening Kia's earnings, as the company sells about 80 percent of its products abroad.

Sales rose 11 percent to $5.41 billion (5.09 trillion won) in the fourth quarter from 4.58 trillion won a year ago. That compared to an estimate of $5.48 billion (5.16 trillion won), according to a Reuters' poll.

For 2007, Kia is expected to post a net profit of $433.4 million (408 billion won), according to 21 analysts polled by Reuters Estimates.

Gasgoo not only offers timely news and profound insight about China auto industry, but also help with business connection and expansion for suppliers and purchasers via multiple channels and methods. Buyer service:buyer-support@gasgoo.comSeller Service:seller-support@gasgoo.com

All Rights Reserved. Do not reproduce, copy and use the editorial content without permission. Contact us: autonews@gasgoo.com