Kia's performance improved significantly last year, aided by strong sales in overseas markets such as North America and the impact of the strong dollar on exchange rates. Annual sales surpassed 100 trillion won for the first time, while both operating profit and sales volume increased compared to the previous year.

Kia headquarters in Yangjae-dong, Seocho-gu, Seoul. /Courtesy of Kia

Kia noted during the '2024 management performance conference call' held on the 24th that last year's sales revenue recorded 107.4488 trillion won, a 7.7% increase from the previous year. This marks the first time Kia's annual sales surpassed 100 trillion won since its establishment. Operating profit rose 9.1% to 12.6671 trillion won, while wholesale sales increased by 0.1% to 3,089,300 units. Both operating profit and sales volume are record highs. The operating profit margin increased by 0.2 percentage points from the previous year to 11.8%.

Kia's performance improved further in the fourth quarter of last year. Sales revenue reached 27.1482 trillion won, an increase of 11.6% compared to the same period last year, and operating profit increased by 10.2% to 2.7164 trillion won. The net profit for the period recorded 1.7577 trillion won, an increase of 8.5%. The operating profit margin for the fourth quarter stood at 10%, achieving double digits for nine consecutive quarters since the fourth quarter of 2022.

◇ Strong sales in the U.S. and emerging markets… surge in hybrid vehicle sales

In the fourth quarter of last year, Kia sold 140,934 units domestically and 629,051 units overseas, totaling 769,985 units globally. This represents a 5% increase compared to the same period last year.

In the domestic market, the launch of the Sportage Product Enhancement (PE) model and increased sales of the K8 and Carnival hybrid contributed to a 1.6% increase in sales volume compared to the same period last year. In overseas markets, including North America, the introduction of new models such as the K4 compact hatchback and Carnival hybrid, coupled with strong sales of recreational vehicles (RVs), resulted in a 5.8% increase in sales.

In the fourth quarter of last year, sales of eco-friendly vehicles reached 164,000 units, a 14.5% increase compared to the same period last year. In particular, hybrid vehicle sales surged 31.7% to 100,000 units. The Carnival hybrid launched in the U.S. in the fourth quarter, and the K8 hybrid released in the second half of last year in Korea drove the sales increase. The share of eco-friendly vehicles in total sales for the fourth quarter rose to 21.5%, up 1.6 percentage points from the same period last year.

Annual sales of eco-friendly vehicles also increased by 10.9% to 638,000 units compared to the previous year. By vehicle type, hybrid sales reached 367,000 units, a 20% increase, while pure electric vehicle sales totaled 201,000 units, up 10.2%. Conversely, sales of plug-in hybrid vehicles decreased by 19.5% to 71,000 units. The share of eco-friendly vehicles in total sales increased by 2.3 percentage points to 21.4% compared to the previous year.

Kia's 'The Kia EV9 GT' is showcased at the 2024 LA Auto Show held at the LA Convention Center in Nov. 2022. /Courtesy of Kia

◇ The strong dollar effect also contributed… offsetting the burden of provisions due to increased sales

Exchange rate effects also influenced performance improvement. As the dollar strengthened, the burden of sales warranty provisions, converted into won, increased, but this was offset by increased sales. Sales warranty provisions refer to the costs reflected in the accounting for free warranties and services provided when selling vehicles. This expense is accrued in dollars, so when the dollar value rises, the amount of provisions converted into won also increases.

Earlier, on the 23rd, Hyundai Motor Company, which announced its performance, reported that the increased sales warranty provision due to the rising exchange rate of the won against the dollar resulted in a 17.2% decrease in operating profit for the fourth quarter compared to the same period the previous year. In the fourth quarter, Hyundai's sales volume decreased by 2.2% compared to the same period last year, and the strong dollar and weak won exchange rate trends became burdens on performance.

◇ This year’s targets: sales of 3,216,000 units and revenue of 112.5 trillion won

Kia has set its targets for this year to ▲sales of 3,216,000 units ▲revenue of 112.5 trillion won ▲operating profit of 12.4 trillion won ▲operating profit margin of 11%. Sales are projected to increase by 4.1% and revenue by 4.7% compared to last year.

Kia emphasized its confidence in achieving a double-digit operating profit margin this year by diversifying products and leveraging differentiated competitiveness despite various external uncertainties. The company plans to launch its first pickup truck, the Tasman, India's strategic model, the SIROS, and a purpose-built mobility (PBV) model known as the PV5 this year. Additionally, Kia aims to introduce the EV4, a sedan-type electric vehicle, globally, alongside the EV5, a compact sport utility vehicle (SUV), in the domestic market.

Kia announced that the annual shareholder dividend would increase by 900 won compared to last year, reaching 6,500 won per share. To enhance shareholder value, it has decided to retire 100% of the purchased treasury shares without conditions starting this year. The method of treasury stock purchase will change from buying all shares in the first quarter last year to a partitioning method in the first and second halves of this year.