Stronger currency hurts S Korea automakers
SEOUL, South Korea (AP):
South Korea's second-largest car maker Kia Motors Corp said on Friday its third-quarter income plunged 27 per cent from a year earlier as a stronger won dented profit.
The earnings come a day after Kia's bigger affiliate, Hyundai Motor Co, also said the stronger local currency hurt its last quarter's earnings, while Japanese rivals, including Honda and Toyota, enjoy a boost from the cheaper yen.
Kia's July to September net income fell to 657.4 billion won (US$621 million) from 903.3 billion won a year earlier. From the previous quarter, the bottom line sank 36 per cent.
Revenue inched down two per cent to 11.5 trillion won, while operating income fell 19 per cent to 566.6 billion won.
Because more than 85 per cent of Kia vehicles are produced and sold overseas, the stronger won against other foreign currencies hit Kia harder than other companies with bigger domestic business.
Its quarterly sales increased to 712,000 vehicles from 630,000 vehicles a year earlier, but profit was thinner because sharp appreciation of the local currency reduced the value of those sales when recalculated in won.
Kia said the average exchange rate of the United States dollar to the won fell to 1,042 won in the last quarter from 1,108 won a year earlier.
For the first nine months of this year Kia sold 2.26 million vehicles, up nine per cent from the same period a year earlier. Its Sportage sport utility vehicle and Soul compact car were among the models that had improved sales in overseas markets, it said.
Kia's Soul received a publicity boost after Pope Francis rode in the boxy car during his visit to South Korea in August.
Shares of Kia slumped after it, Hyundai Motor and another Hyundai company announced last month a $10.1 billion won land purchase in Seoul's posh Gangnam district that investors deemed too expensive. Hyundai Motor said it will build a new headquarters and automotive park in the area.