Kia’s operating profit exceeded 2 trillion won last year… “Thanks to the increase in sales of high-margin recreational vehicles”

Input 2021.01.27 14:40

Hunger (old Kia Motors (000270)) Last year’s operating profit increased by 2.8% from the previous year to KRW 2.665 trillion. Although quality costs related to defects in the Theta 2 engine were incurred in the third quarter of last year, improvement in the overall constitution was achieved, such as ▲ improving sales mix ▲ increasing average sales price ▲ reducing incentives due to inventory stabilization. Last year’s operating margin was 3.5%, the same as the previous year.

More than half of last year’s operating profit occurred in the fourth quarter. Kia’s operating profit in the fourth quarter of last year increased by 117.0% year-on-year to KRW 1.281.6 trillion, and its operating margin rose by 3.9 percentage points to 7.6%. In Korea, the sales mix improved in response to the effect of new cars such as Sorento, Carnival, and the new K5, strong telluride sales in the US market, and sales of new cars such as Seltos and Sonnet in India increased. In particular, the proportion of high-margin recreational vehicles (RV) sales reached 58.7%, an increase of 6.2 percentage points from the same period last year, recording the highest level ever, playing a decisive role in expanding profitability.

Annual sales increased 1.8% year-on-year to KRW 59,168.1 billion due to improved mixes following the expansion of RV and new car sales, and expansion of eco-friendly car sales.

However, Kia’s last year’s sales performance fell relatively sharply from the previous year. It sold 552,400 units in Korea and 205,4432 units overseas, for a total of 2.6 million 68322 units. Although domestic sales increased, overseas sales decreased by more than 10%, resulting in a 7.6% decrease in overall sales compared to the previous year.

Kia announced its goal to sell 2922,000 units in the domestic and international markets this year. It is planning to increase sales by 12.1% compared to last year. Domestic sales are targeting 535,000 units, a slight decrease from the previous year’s performance, and 2,387,000 units overseas, an increase of 16.2%.

Kia predicts that “the impact of Corona 19 will be mitigated this year and global auto demand will recover somewhat”, but “It is expected that the impact of Corona 19 will be prolonged and the exchange rate situation will not be good in some markets. I plan to focus.”

In the domestic market, overall industrial demand is expected to decrease due to the base effect of demand that was high in the previous year and the reduction in individual consumption tax cuts. It plans to improve profitability through successful launch of the company.

In the U.S. market, it plans to start selling competitive new cars such as Sorento in earnest, and in Europe, by launching a dedicated electric car CV, which will strengthen product competitiveness and brand status in the eco-friendly car market. The Indian market continues to expand sales of popular car models such as Seltos and Sonnet, and exports to the Asia-Pacific region such as Indonesia in earnest.

Kia decided to set the dividend at the end of 2020 at 1,000 won per share (26.7% based on dividend payout ratio). This is a balanced consideration of profitability recovery and financial stability, and will continue to promote shareholder value improvement in the future.