Kia held a corporate presentation (IR) via a conference call on the 27th, announcing its Q3 2023 management results.
Kia sold 778,213 units in Q3 2023 (up 3.5% year-on-year), with revenues amounting to 25.5454 trillion won (up 10.3%), operating profit at 2.8651 trillion won (up 272.9%), ordinary profit at 3.3266 trillion won (up 355.7%), and net profit (including non-controlling interests) at 2.2210 trillion won (up 384%). (consolidated IFRS)
A Kia representative stated regarding the Q3 results, “Thanks to robust demand in the global market, sales continue to be strong, alongside improvements in the mix of high-value models such as RVs, stabilization in raw material prices, and favorable exchange rates, which have all contributed to increased profitability.”
He continued, “Despite unstable external conditions, including geopolitical risks due to inter-country conflicts and weakened consumer sentiment due to high interest rates and inflation, we plan to focus on enhancing profitability.”
In Q3 2023, Kia’s sales included ▲134,251 units in Korea (up 1.1% from the previous year) and ▲643,962 units overseas (up 4% from the previous year), totaling ▲778,213 units globally (up 3.5% from the previous year). (wholesale basis)
Despite an overall decline in demand due to the end of the individual consumption tax reduction in Korea, sales increased slightly compared to the previous year, thanks to the popularity of models like the Sportage, Sorento, and Carnival, as well as the launch of new vehicles such as the Sorento.
Overseas, strong demand in major regions such as North America and Europe boosted sales, even though some emerging markets like India, the Asia-Pacific, and Latin America experienced declines.
Q3 revenues recorded 25.5454 trillion won, a 10.3% increase year-on-year, driven by an increase in sales in North America and Europe, rising average selling prices (ASP), increased sales in RV models, and favorable exchange rate effects.
The share of high-margin RV sales (excluding China) rose 2.2 percentage points from the previous year to 68.7%, marking an all-time high.
The cost of sales ratio improved by 2.6 percentage points year-on-year to 77.1%, thanks to increased volumes, price effects, and reduced material costs. The selling and administrative expense ratio decreased by 5.3 percentage points from the previous year to 11.7% due to reduced sales warranty costs.
Operating profit for Q3 amounted to 2.8651 trillion won, up 272.9% year-on-year, driven by ▲an increase in number of units sold ▲improvement in the sales mix focusing on high-profit RV models and increased prices ▲stabilization in raw material prices ▲and a base effect from last year’s Q3 sales warranty provision. As a result, the operating profit margin increased by 7.9 percentage points to 11.2%.
Meanwhile, while the average exchange rate for the US dollar against the won in Q3 fell 2.0% year-on-year to 1,311 won, the average exchange rate for the euro against the won rose by 6.0% to 1,428 won, contributing to some profitability improvement.
In addition, Kia’s cumulative management results through Q3 this year included ▲sales of 2,354,229 units (up 8.4%) ▲revenues of 75.4803 trillion won (up 19.1%) ▲operating profit of 9.1421 trillion won (up 98.4%) ▲net profit of 7.1578 trillion won (up 112.2%), achieving the highest cumulative figures for Q3 on record.
Kia’s eco-friendly vehicle sales saw a balanced growth in hybrids, plug-in hybrids, and electric vehicles, recording 149,000 units (up 21.2% year-on-year), and the share of eco-friendly vehicle sales among total sales also rose by 2.7 percentage points from the previous year to 19.5%. (retail sales basis, rounded to the nearest hundred)
By type, the sales figures were ▲76,000 hybrids (up 21.9% year-on-year) ▲24,000 plug-in hybrids (up 12.9%) ▲and 50,000 electric vehicles (up 24.5%).
The market share proportions of eco-friendly vehicle sales were respectively ▲33.4% in Korea (35.3% in the same period last year) ▲39.6% in Western Europe (40.4% in the same period last year) ▲and 15.8% in the USA (9.2% in the same period last year).
Kia predicts that geopolitical risks from international conflicts and weakened consumer sentiment from high interest rates and inflation will continue to create an unstable external environment. Nevertheless, it expects a persistent uptrend in sales in advanced markets into Q4.
Therefore, based on favorable latent demand, Kia plans to continue focusing on popular RV models and eco-friendly vehicle sales to secure profitability while concentrating on enhancing qualitative sales capabilities through region-specific strategies.
Kia intends to expand sales in Korea through improved models such as the K5 and Carnival, while also successfully launching key models in various markets, including the EV9 in major overseas markets such as the USA and Europe, the updated Sonet in India, and the dedicated electric vehicle EV5 in China, to enhance sales and brand power.
Additionally, Kia will continuously upgrade its product and trim mix and uphold a pricing policy that matches improved brand and product value to maximize profitability.
Lee Sang-jin daedusj@autodiary.kr