The Wall Street Journal (Seoul) - Kia Motors Corp., South Korea's No. 2 car maker by sales, on Friday posted a 91% rise in net profit for the quarter ended March 31, as robust demand for new models and an increased sales ratio of high-end to low-end cars boosted profit despite a strong won.
Net profit in the quarter jumped to 953.2 billion Korean won ($888 million) from 498.5 billion Korean won in the same period a year earlier, the company said in a statement.
Operating profit climbed 90% to 839.9 billion Korean won from 441.8 billion Korean won a year earlier, while sales were up 36.7% to 10.658 trillion Korean won from 7.795 trillion Korean won.
Kia's year-earlier figures have been restated to meet International Financial Reporting Standards, which became mandatory starting this year.
"Strong sales of the K5 midsize sedan and the Sportage sport-utility vehicle gave a hefty boost to the bottom line in the recent past quarter," company spokesman Kim Dae-kweon said. The K5 sedan went on sale in March in China, and the company expects the car will further contribute to its second-quarter results, Mr. Kim said.
Kia plans to produce the K5 sedan, which is being sold as "Optima" in global markets except for South Korea and China, in its U.S. plant in Georgia from September this year to meet rising demand for its "price-competitive, fuel-efficient" vehicles due to high oil prices.
Sales of the K5 sedan will pick up speed going into the second half, paving the way for Kia to gain a bigger share in major overseas markets and to enjoy improved average selling prices, benefiting from Japan's earthquake, analysts forecast.
"As its production facilities still have room to produce more vehicles, unlike Hyundai, Kia will be able to make a quick response to market demands for its cars," said Mo Se-jun, an analyst at Hana Daetoo Securities.
In March, Kia grabbed a record market share of 3.5% in the U.S., compared with 2.9% a year earlier. Globally, its market share was static at 2.9% during the same period.
The dollar averaged 1,120.40 Korean won in the first quarter compared with 1,144.08 Korean won a year earlier.
But Kia's exposure to a strong won will be limited, as volume sales and improving product prices will be driving up profit throughout the year, analysts say.
Kia shares were 58% higher this year as of Thursday, compared with the broader Kospi's 7.7% gain.
