Kia announced its 2023 Q4 business performance on the 25th.
Kia sold 733,155 units (up 0.4% from the previous year) in Q4 2023 (wholesale basis), with revenues of 24.3282 trillion won (up 5.0%), operating profit of 2.4658 trillion won (down 6.0%), recurring profit of 2.5264 trillion won (down 3.9%), and net income of 1.6201 trillion won (down 20.5%) recorded. (IFRS consolidated basis)
A Kia representative stated regarding last year’s Q4 results, “Sales increased mainly in advanced markets like North America and Europe, and the profit structure, based on the ongoing brand strength and product appeal throughout the year, continued due to rising vehicle prices driven by sales of high-margin vehicles.”
However, it was added that “Profitability slightly decreased compared to the previous year due to increased incentives stemming from intensified competition among companies and negative exchange rate effects from the strengthening of the won.”
Regarding the outlook and targets for 2024, the representative mentioned, “Although uncertainty is high due to demand slowdown from high interest rates and inflation, as well as ongoing international tensions, we will continue to improve the sales mix focused on high-margin models, the full-scale global sales of the flagship EV9, and expand our lineup of dedicated electric vehicles such as the EV3 to EV5 to enhance profitability.”
Furthermore, “Based on this, our targets are to sell 3.2 million units, a 3.6% increase from last year, achieve revenues of 101.1 trillion won (1.3% increase), operating profit of 12 trillion won (3.4% increase), and an operating profit margin of 11.9%, up 0.3 percentage points,” the representative said.
In Q4 2023, Kia’s sales totaled 138,743 units in the domestic market (down 4.8% vs. last year) and 594,412 units overseas (up 1.7% vs. last year), yielding a global total of 733,155 units, a 0.4% increase from the previous year. (wholesale basis)
Domestic sales declined year-on-year due to a decrease in overall demand owing to the end of the individual consumption tax reduction and reduced purchasing power from sustained high interest rates, coupled with the impact of model aging among certain passenger car types.
Despite a slowdown in sales in the African/Middle Eastern regions and Russia due to geopolitical risks, overseas sales saw slight growth thanks to strong sales in major markets like North America and Europe.
In Q4, sales increased by 5.0% year-on-year to reach 24.3282 trillion won, benefiting from the higher sales proportion of high-priced and high-spec models in North America and Europe, as well as an increase in the average selling price (ASP) due to expanding sales of eco-friendly vehicles and high-value-added cars.
Operating profit for Q4 decreased by 6.0% year-on-year to 2.4658 trillion won, influenced by increased incentives due to intensified industry competition, unfavorable exchange rates due to the strengthening of the won, and rising labor costs, even though sales expansion and lower material costs from declining raw material prices contributed to cost savings.
While operating profit narrowed somewhat in the last quarter, Kia has maintained a high-profit structure, achieving more than 2 trillion won in operating profit for five consecutive quarters since Q4 2022, along with double-digit operating profit margins.
The cost of sales ratio rose by 0.4 percentage points year-on-year to 78.1%, while the selling and administrative expense ratio increased by 0.9 percentage points to 11.8% due to rising operating-related costs such as labor and marketing expenses.
Kia’s cumulative annual business performance for 2023 was sales of 3,087,384 units (up 6.4% vs. last year), revenues of 99.8084 trillion won (up 15.3%), operating profit of 11.6079 trillion won (up 60.5%), and net income of 8.778 trillion won (up 62.3%).
Record increases in global sales, an expanded share of high-margin regions, growth in the share of high-priced and high-spec trims, and the favorable won-dollar exchange rate (due to the weakening of the won) led to the highest achievements across all business indicators in the company’s history.
Kia’s eco-friendly vehicle sales in Q4 increased significantly, boosted by the sales expansion of the new Sportage and Sorento hybrids/plug-in hybrids, along with the new EV9, resulting in a total of 143,000 units sold, a year-on-year increase of 18.1%. (retail basis, rounded to the nearest hundred)
The proportion of eco-friendly vehicle sales in Kia’s overall sales rose to 19.9%, an increase of 2.9 percentage points year-on-year.
By type, hybrid vehicles accounted for 76,000 units (up 5.1% vs. last year), plug-in hybrids reached 21,000 units (up 11.6%), and electric vehicles totaled 47,000 units (up 52.2%).
In major markets, the share of eco-friendly vehicles was 39.3% in the domestic market (up 9.7 percentage points), 42.5% in Western Europe (up 2.4 percentage points), and 14% in the U.S. (up 0.3 percentage points), showcasing consistent growth in key markets.
In 2023, global sales of eco-friendly vehicles totaled ▲HEV 306,000 units (up 20.8% vs. last year) ▲PHEV 88,000 units (up 15.5%) ▲EV 182,000 units (up 15.3%), reaching a total of 576,000 units, an 18.2% increase from the previous year, with eco-friendly vehicles’ share at 19.1% (up 2.3% vs. last year).
Kia plans to pursue sustainable growth despite expected difficult business conditions due to international political uncertainties, purchasing sentiment declines from high interest rates and inflation, and a market tilted towards buyers due to reduced pent-up demand, by strengthening its electric vehicle lineup as part of a structurally established virtuous profit system to enhance its leadership in the eco-friendly vehicle market.
The company aims to continue driving sales growth in mature markets like the U.S. and Europe, focusing on popular models like the Sorento and Sportage and eco-friendly vehicles amidst high demand for high-value vehicles.
Despite concerns about a slowdown in the electric vehicle market, Kia plans to solidify its leadership in the eco-friendly vehicle market through the global sales ramp-up of the EV9, which was selected as the ‘2024 North American Car of the Year’ in the utility category, along with competitive pricing for mid- to small-sized electric vehicles from the EV3 to the EV5.
In doing so, Kia aims to sell 3.2 million units (wholesale basis), a 3.6% increase from last year’s performance, recording revenue of 101.1 trillion won (1.3% increase), operating profit of 12 trillion won (3.4% increase), and an operating profit margin of 11.9%, as presented in its 2024 business plan.
Meanwhile, the company will also aggressively promote shareholder value by executing its previously announced medium- to long-term share buyback program, purchasing its own shares worth 500 billion won, and increasing the ratio of the buyback’s cancellation contingent (to 100% if management targets are met by Q3, up from the previous cancellation ratio of 50%) to achieve a total shareholder return rate of up to 31% this year.
Byung-jin Lee daedusj@autodiary.kr