Kia posts a record quarterly profit beating any expectations

Article by Christian A., on August 26, 2010

Kia Motors Corp. beat forecasts and posted a record quarterly profit last Friday. The South Korean carmaker has plenty to rejoice about since it is expected to continue its winning streak until at least next year with sales predicted to increase by a double-digit percentage.

Kia is part of Hyundai Motor Group along with affiliate Hyundai Motor Co. and is the world's No. 4 carmaker based on first-half sales. 

Analysts say that Kia will continue to outpace rivals due to new models and the growing demand for fuel-efficient smaller cars. Kia has a bright outlook and expressed confidence for 2010.

In the first nine months, US sales were up 5% to 238,570 units. But like other carmakers, Kia is worried about the drop in car demand when government ends the incentives it has been giving to buy fuel-efficient cars.

The strengthening won is also one of its worries. Yun Tae-sik, an auto analyst at Dongbu Securities, said that incentives will continue to be available until the end of 2009 and that Kia's challenges for next year include the foreign exchange rate and demand.

According to a Thomson Reuters I/B/E/S poll, Kia is predicted to post an almost sevenfold jump in annual net profit to 707.0 billion won ($595.1 million) for the whole of 2009.

For the third quarter ended Sept. 30, Kia posted a net profit of 402.0 billion won (about $340 million). This beat a 260.6 billion won profit predicted by 10 analysts in a Reuters poll.

This is made all the more impressive when compared with a 22.1 billion won net loss a year earlier and a 347.1 billion won profit in the second quarter.

Operating profit stood at 313.5 billion won, above a 276.4 billion won poll forecast. A year earlier, there was a 53.7 billion won operating profit while in the April-June period, a 330.3 billion won operating profit was recorded. Kia said that its third-quarter net profit was boosted by strong results from affiliates including Hyundai Mobis Co. and Hyundai Steel.

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