Kia Corp., South Korea’s second-biggest carmaker by sales, said Thursday its fourth-quarter net profit fell 21 percent from a year earlier due to higher costs and the strengthening won.

Net profit for the three months ended in December fell to 1.62 trillion won (US$1.2 billion) from 2.04 trillion won during the same period in 2022, the company said in a statement.

“Increased incentives, unfriendly exchange rates (which means the strengthening won against the dollar) and higher labor costs put a dent on the quarterly results,” a company spokesperson said.

The dollar fell to an average of 1,289.40 won in the fourth quarter from 1,344.80 won a quarter earlier, data from the Bank of Korea showed. A strong won drives down the value of an exporter’s dollar-denominated earnings when converted into the local currency.

Operating profit fell 6 percent to 2.47 trillion won in the December quarter from 2.62 trillion won a year ago. Sales were up 5 percent to 24.33 trillion won from 23.16 trillion won during the same
period.

For the whole of 2023, net income jumped 62 percent to 8.78 trillion won from 5.41 trillion won the previous year on robust sales of high-end SUVs.

Operating profit also soared 61 percent to 11.61 trillion won in 2023 from 7.23 trillion won a year earlier. Sales were up 15 percent to 99.81 trillion won from 86.56 trillion won.

In 2024, Kia has set its full-year sales and operating profit at 101.1 trillion won and 12 trillion won, respectively.

To enhance shareholder value, the company plans to buy back 500 billion won worth of its treasury stocks and cancel half of them in the first half.

If the maker of Sorento SUVs and K5 sedans achieves its targeted earnings figures for the January-September period, it will cancel the remainder during the fourth quarter, the company said without giving the target numbers.

The stock cancellation plan sent Kia 2.5 percent higher at 90,100 won as of 11 a.m., far outperforming the broader KOSPI’s 0.6 percent loss.

Source: Yonhap News Agency