Kia Beats Profit Forecast and Shares Cut Losses
Kia Motors Corp, South Korea’s No.2 automaker reported on Friday a swing to a bigger-than-expected profit in the first quarter as a weaker won boosted overseas earnings and local sales grew.
Kia and its affiliate Hyundai Motor Co (OOTC:HYMOF) <005380.KS> are expected to benefit in the months ahead from weakness in the local currency and South Korea’s steps to boost domestic car sales.
Both have gained share in the U.S. and developed markets with lineups of smaller, cheaper vehicles, but neither are immune to the industry’s worst-ever downturn, which has driven U.S. auto giants General Motors (NYSE:GM) and Chyrsler LLC to the brink of bankruptcy and is dragging Japanese rivals like Toyota Motor Corp (NYSE:TM) <7203.T> into the red.
“A weaker won and new models will help Kia keep improving earnings for the time being, but it’s still premature to be optimistic about overseas markets, especially Eastern Europe,” said Kim Byoung-gook, an analyst at Daishin Securities.
Kia reported a net profit of 97.4 billion won ($72.09 million) in the first quarter, beating a 38.8 billion won forecast by 11 analysts in a Reuters poll.
That compared with a 24.8 billion won loss a year earlier and a 74.8 billion won profit in the last quarter of 2008.
After the results, shares in Kia recovered over half their earlier losses, trading down 1.4 percent as of 0210 GMT.
The maker of the Morning minicar posted a 88.9 billion won operating profit during the first quarter, above a forecast of 69.9 billion won profit in the poll.
That compared with a 102.0 billion won profit a year ago and a 35.9 billion won profit during the last three months of 2008.
Bolstering Kia’s price competitiveness, the won dropped over 30 percent against the dollar and almost 40 percent versus the yen in January-March from last year.
Kia’s sales fell 5.8 percent to 3.50 trillion won from a year ago.
The company sold 219,839 vehicles from domestic factories in the first quarter, down 12.6 percent from a year ago, with overseas sales declining 20.6 percent but local sales rising 6.4 percent.
For the whole of 2009, Kia is expected to more than triple its net profit to 347.8 billion won from last year, a Reuters Estimates poll of 17 brokers showed.
On Thursday, Hyundai posted a smaller-than-expected fall in quarterly profit, but said it grew U.S. market share.
Shares in Kia jumped 30 percent in the first quarter, beating the wider market’s <.KS11> 13 percent rise. ($1=1351.1 Won)
Kia Beats Profit Forecast and Shares Cut Losses
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