Kia Breaks Through COVID, Records All-Time High Earnings "High-Profit Models Sold Well" (Comprehensive)

Kia Announces Q4 and Annual Results on 27th
Q4 Revenue Reaches KRW 16.91 Trillion, Operating Profit KRW 1.28 Trillion, Highest Quarterly Performance Ever
Annual Sales 2,606,832 Units, Revenue KRW 59.17 Trillion, Operating Profit KRW 2.07 Trillion
Record High Annual Revenue

[Asia Economy Reporter Changhwan Lee] Kia recorded its highest-ever performance both in the fourth quarter of last year and on an annual basis. This was largely due to a significant improvement in profitability through the expansion of new model sales.

On the 27th, Kia announced that its operating profit for the fourth quarter of last year was 1.2816 trillion KRW, an increase of 117% compared to the same period last year. During the same period, sales revenue rose 5% to 16.9106 trillion KRW.

Both quarterly sales revenue and operating profit were the highest ever on a quarterly basis.

In the fourth quarter, Kia's global sales totaled 742,695 units, similar to the previous year (a 0.005% decrease), with domestic sales down 5.2% to 137,389 units and overseas sales up 1.2% to 605,306 units.

Despite challenges such as the resurgence of COVID-19, a reduced individual consumption tax cut in the second half, and partial strikes at domestic factories, the domestic market minimized the decline thanks to strong sales of key new models such as Sorento, Carnival, and K5.

In overseas markets, continued expansion of Telluride sales, which has established itself as a high-profit model in the U.S., along with significant sales growth in India, minimized the impact of sluggish sales in Europe, where market demand contracted, as well as in emerging markets such as Latin America and the Middle East.

Regarding operating profit that exceeded market expectations, improvements in sales mix driven by strong new model effects from Sorento, Carnival, and the new K5 in the domestic market, robust Telluride sales in the U.S., and increased sales of new models such as Seltos and Sonet in India were key drivers.

The share of RV (recreational vehicle) sales rose 6.2 percentage points from the same period last year to 58.7%, marking an all-time high and playing a decisive role in expanding profitability, according to the company.

A company official stated, "Despite difficult management conditions due to production disruptions caused by partial strikes and decreased market demand amid the ongoing COVID-19 pandemic, management performance improved through an increase in average selling price and mix improvement by expanding sales of high-profit new models." He added, "As a result, operating profit for this quarter reached a record high on a quarterly basis."

He continued, "This year, we will continue strong sales of high-profit RV models such as Seltos, Sorento, Carnival, and Telluride, further strengthen profitability with the launch of the global volume model Sportage, and sequentially introduce the dedicated electric vehicle model CV (project name) in key regions to solidify our position as a leading electric vehicle brand."

The new Kia logo is displayed on the exterior wall of Kia Motors headquarters in Seocho-gu, Seoul. The new logo removes the previous red oval border and presents the letters "KIA" in a simple and futuristic style. Photo by Hyunmin Kim kimhyun81@

Overcoming COVID-19, Last Year's Sales Also Hit Record High

Kia also recorded its highest-ever annual sales last year. Despite the deteriorated business environment due to COVID-19, performance improved through increased sales of high-profit models.

Kia announced that last year's sales revenue was 59.1681 trillion KRW, and operating profit was 2.0665 trillion KRW. Compared to the previous year, sales revenue increased by 1.8% and operating profit by 2.8%.

Mix improvement from expanded sales of high-profit RV models and new cars, as well as increased sales of eco-friendly vehicles, contributed to the rise in sales revenue and operating profit.

Annual sales totaled 2,606,832 units globally, down 7.6% from the previous year, with domestic sales up 6.2% to 552,400 units and overseas sales down 10.7% to 2,054,432 units.

Focus on Sales Recovery and Profitability Improvement in Key Markets This Year

Kia expects global automobile demand to somewhat recover this year as the impact of COVID-19 eases, but concerns remain over prolonged COVID-19 effects in some markets and continued unfavorable exchange rate conditions. Therefore, the company plans to focus on sales recovery and sustained profitability improvement in key markets.

The sales target for 2021 is set at 2,922,000 units (including CKD), a 12.1% increase from last year's performance. The domestic target is slightly lower than last year at 535,000 units, while overseas sales are targeted to increase by about 16.2% to 2,387,000 units.

In the domestic market, overall industry demand is expected to decline due to the base effect from high demand last year and a reduced individual consumption tax cut, but profitability will be improved through continued strong sales of popular models such as K5, Sorento, and Carnival, as well as the successful launch of the K7 successor model, the new Sportage, and the dedicated electric vehicle CV.

In the U.S. market, Kia will fully promote sales of competitive new models such as Sorento, and in Europe, it plans to launch the dedicated electric vehicle CV to strengthen product competitiveness and brand status in the eco-friendly vehicle market. In India, sales expansion of popular models such as Seltos and Sonet will continue, and exports will be actively promoted mainly in the Asia-Pacific region, including Indonesia.

Meanwhile, Kia decided on a year-end dividend of 1,000 KRW per share for 2020 (dividend payout ratio of 26.7%). This reflects a balanced consideration of profitability recovery and financial stability, and the company plans to continue efforts to enhance shareholder value going forward.