Operating Profit of 7 Trillion Won Last Year... "All-Time High"
3.2 Million Units Sold This Year... Operating Profit Target of 9 Trillion Won
[Asia Economy Reporters Su-yeon Woo and Hyun-seok Yoo] Kia surpassed 7 trillion KRW in operating profit last year, setting a new record for its best-ever performance. This was the result of efforts to improve profitability through a sales mix focused on high value-added models and reduced incentives. Although concerns about an unstable external environment remain high this year, Kia plans to continue breaking records by expanding profitability based on strong backlog demand, aiming to achieve an operating profit of 9 trillion KRW.
On the 27th, Kia held an investor relations (IR) conference call to announce its cumulative annual business results for the previous year. Revenue reached 86.559 trillion KRW, and operating profit was 7.2331 trillion KRW, up 23.9% and 42.8% respectively compared to the previous year. Net profit was 5.409 trillion KRW, an increase of 13.6% year-on-year. Global sales volume was 2,901,849 units, up 4.5% from the previous year.
Joo-Jeong Joo, Vice President of Kia, stated, "Sales increased due to expanded available inventory from improved parts supply, and profitability improved through a sales structure centered on high-margin vehicles with enhanced product competitiveness, price increases, and reduced incentives. Favorable exchange rate effects also continued, significantly boosting revenue and profitability."
For the fourth quarter, revenue was 23.1642 trillion KRW and operating profit was 2.6243 trillion KRW, representing increases of 34% and 123% respectively compared to the same period last year. Wholesale sales rose about 12% year-on-year to 730,259 units. Domestic sales increased 10.7% to 145,768 units, while overseas sales grew 13.2% to 584,491 units.
Domestic sales recorded double-digit growth, supported by the new model effect of the new Niro, increased sales of popular SUVs such as the Seltos, Sorento, and Carnival due to improved parts supply, and a favorable base effect from the previous year when semiconductor shortages had a significant impact.
Overseas sales were still affected by the suspension of sales in Russia. However, production volume increased due to the shift to a three-shift system at the India plant, and the new model effects of the Carens (India) and new Sportage continued. Improved semiconductor supply expanded availability, partially alleviating backlog demand, resulting in double-digit growth rates in most regions.
Fourth-quarter revenue increased 34.8% year-on-year to 23.1642 trillion KRW, driven by increased sales volume from improved semiconductor and parts supply, higher average selling prices per unit, and continued favorable exchange rate effects.
The cost of sales ratio improved by 2.5 percentage points year-on-year to 77.7%, despite rising raw material costs, due to significant revenue growth and exchange rate benefits. The selling and administrative expense ratio also declined by 2.1 percentage points to 10.9%, despite most costs increasing, thanks to the substantial rise in revenue.
Fourth-quarter operating profit rose 123.3% to 2.6243 trillion KRW, despite increased costs such as materials, driven by expanded sales volume, improved sales mix focused on high-spec and high-priced vehicles, price increases, and significant incentive reductions based on a 'getting the right price' policy supported by enhanced product quality and brand trust.
Additionally, the average KRW-USD exchange rate in the fourth quarter was 1,359 KRW, a 14.9% increase from the previous year, which contributed significantly to revenue growth and profitability improvement.
This year, Kia plans to maximize supply by early normalization of production, including expanded overtime work, to first address the high backlog demand across all global regions. It will also strengthen its sales system centered on eco-friendly vehicles and high-margin RV models to enhance profitability.
Kia aims to sell 3.2 million units (wholesale basis) this year, a 10.3% increase from last year. Through this, it expects revenue to rise 12.7% to 97.6 trillion KRW and operating profit to increase 28.6% to 9.3 trillion KRW. The operating profit margin is targeted at 9.5%.
Vice President Joo explained, "Demand remains strong by region, with many volume requests. Based on current trends, we expect to comfortably reach the planned volume."
Meanwhile, Kia has set the year-end dividend at 3,500 KRW, a 16.7% increase from the previous year, to be finalized at the shareholders' meeting, aiming to enhance shareholder value and return profits from strong growth.
Furthermore, considering capital efficiency, shareholder value improvement, and positive mid-to-long-term profit outlooks, Kia has decided to implement a mid-to-long-term treasury stock repurchase program worth up to 2.5 trillion KRW over the next five years, not as a one-time event. It plans to further enhance shareholder value by canceling 50% of the repurchased shares.
He emphasized, "We will do our best to raise corporate value and support stock price appreciation. The company will make every effort to enhance shareholder value."
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