Kia Motor's profit tumbles on strong won
- Article by: YOUKYUNG LEE
- Associated Press
- January 25, 2013 - 1:15 AM
SEOUL, South Korea - Kia Motors Corp. said Friday its fourth-quarter operating profit was halved as the won's rise erased overseas earnings and production was disrupted by a strike.
South Korea's second-largest car maker said its October-December operating income plunged 51 percent from a year earlier to 404.3 billion won ($376.4 million).
Revenue rose 3 percent to 11.3 trillion won. Net profit, which included accounting gains from stakes in affiliate companies, fell 7 percent to 737.5 billion won.
Both operating income and net income were below market expectations. Shares of Kia closed 4.9 percent lower in Seoul after the company issued its earnings report.
Kia Motors blamed the lower profit on the strong won and a strike in the third quarter that interrupted vehicle production.
South Korean exporters are feeling the pinch of the local currency's rise that began in the fourth quarter of last year on super-easy monetary policies around the world. Its bigger affiliate, Hyundai Motor Co., also saw its profit fall despite a rise in sales. Samsung Electronics Co. also expects a negative impact from currency-related losses.
Kia Motors gave a dim outlook for 2013, citing weak demand at home and the local currency's continued rise against the U.S. dollar and Japanese yen.
Even though the company expects to see a moderate increase in annual car sales this year to 2.75 million vehicles from 2.72 million in 2012, more than two-thirds of its products are sold overseas. The won's strength makes South Korean exports relatively more costly in overseas markets and erodes profits repatriated to South Korea.
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