Kia 2Q Operating Profit 3.6 Trillion Won, Profit Margin 13.2%... Record High (Update)

Kia Announces 2024 Q2 Business Performance Results

Kia announced on the 26th that its consolidated operating profit for the second quarter of this year reached 3.6437 trillion KRW, a 7.1% increase compared to the same period last year. Sales revenue rose by 5.0% to 27.5679 trillion KRW during the same period.

Together with Hyundai Motor, which announced its Q2 results the previous day, both operating profit and sales revenue were recorded at the highest levels ever on a quarterly basis. In particular, the operating profit margin was 13.2%, higher than the previous record set in Q1 (13.1%). This places Kia among the top tier of completed vehicle manufacturers of a certain scale or larger.

Hyundai Motor Company and Kia Headquarters in Yangjae-dong, Seoul
Photo by Yonhap News

Sales volume in Q2 slightly decreased compared to Q2 last year. Domestic sales dropped by 8.4% to 138,150 units, while overseas sales increased by 0.01% to 657,033 units. Total domestic and international sales volume was 795,183 units, down 1.6% year-over-year.

In the domestic market, demand declined due to a base effect ahead of the end of the individual consumption tax reduction in the first half of last year. Overseas, sales were strong mainly in the North American region, but exports of small cars to Europe declined due to disruptions caused by electrification transition and restructuring of consignment factories. In India, sales decreased due to aging model years of some vehicle types.

Although sales volume decreased, revenue increased due to strong sales in the North American region where relatively higher-priced models are popular. Amid rising sales, material costs decreased, resulting in a cost of sales ratio of 75.9%, the lowest ever recorded.

Additionally, the weak Korean won exchange rate effect and price increases contributed to improved profitability. Incentives were at the industry's lowest level, and increasing sales centered on high-profit models also positively impacted profitability.

The previous quarterly record for operating profit was 3.4257 trillion KRW in Q1, but a new record was set in just one quarter. Based on the first half of the year, all major financial indicators including sales revenue, operating profit, ordinary profit, and net income reached the highest levels ever, except for sales volume.

Sales of eco-friendly vehicles reached 162,000 units, an 8.3% increase compared to the same period last year. The proportion of eco-friendly vehicles among all models rose by 2.5 percentage points to 21.4%.

Vehicles waiting for delivery in front of Kia Gwangmyeong Plant
[Photo by Yonhap News]

The market outlook for the second half of the year is expected to be challenging. Geopolitical risks remain, and policy volatility has increased as major markets hold elections. The dampened consumer sentiment due to high interest rates and inflation, as well as intensified competition among manufacturers due to slowing electric vehicle demand, were also viewed negatively.

In response, Kia plans to flexibly apply its production system to maintain appropriate inventory levels according to market conditions, while carefully crafting incentive strategies to steadily expand profitability. In the U.S., new models such as the Sorento Hybrid facelift, Carnival Hybrid, and K4 will be launched.

In Europe, Kia will release facelift models of the EV3 and EV6 and supply electric and hybrid models appropriately based on actual demand. The company explained, "Despite the decline in sales, profitability expansion continued due to sales focused on high-profit vehicles, price increases driven by strong performance in high-profit advanced markets such as the U.S., and favorable exchange rate effects."