Kia held a conference call on the 26th to announce its Q2 2024 financial results.
Kia sold 795,183 units in the second quarter of 2024 (a decrease of 1.6% year-on-year), and the corresponding managerial performance showed: ▲ revenue of 27.5679 trillion KRW (up 5.0%) ▲ operating profit of 3.6437 trillion KRW (up 7.1%) ▲ ordinary profit of 4.04 trillion KRW (up 9.7%) ▲ net profit (including non-controlling interests) of 2.9566 trillion KRW (up 5.0%). (Consolidated based on IFRS)
A Kia representative stated regarding the Q2 results, “Due to the ongoing high-interest rate trend, global industry demand is showing limited growth, which led to a slight decrease in Kia’s sales compared to the previous year due to production gaps caused by the transition to electrified production at domestic and overseas factories, insufficient available inventory, and a sales decline from the discontinuation of certain small vehicle models.”
However, they explained, “Despite the decrease in sales, profitability continued to expand due to the focus on high-margin vehicle sales, price increases, and mix improvement effects from strong performance in high-margin advanced markets like the United States, industry-low incentive levels, decreased material costs due to reduced raw material prices, and favorable exchange rate effects.”
■ Q2 2024 (April-June) Performance
In Q2 2024, Kia’s sales were recorded as ▲ domestic 138,150 units (down 8.4% year-on-year) ▲ overseas 657,033 units (up 0.01% year-on-year), totaling a decrease of 1.6% year-on-year at 795,183 units globally. (Wholesale basis)
Domestic sales experienced an impact from the high comparison base of last year that benefited from a reduction in individual consumption tax, with industrial demand dropping sharply by 9.5%. This led to an 8.4% decrease despite expanded sales of popular RV models and hybrid models such as Seltos, Sportage, Sorento, and Carnival.
Overseas sales continued to see solid demand centered in North America, with significant sales growth among major RV models, while also increasing supply to match demand in Central and South America and the Asia-Pacific region.
However, the transition of the AutoLand Gwangmyeong electrification plant focused on compact vehicles led to a decline in Morning supply due to production restructuring at contract manufacturing plants, resulting in decreased sales in Europe where demand for compact vehicles is high. In India, sales declined due to the aging of some models.
Despite the decrease in sales volume, Q2 sales revenue increased by 5.0% year-on-year to 27.5679 trillion KRW, driven by strong sales in the core high-revenue North American market and an increase in the average selling price (ASP) due to a larger portion of eco-friendly and RV sales.
The cost of sales ratio improved by 1.0 percentage points compared to the same period last year, reaching 75.9%, marking the lowest level in history. The selling and administrative expense ratio rose by 0.8 percentage points year-on-year to 10.9% due to overall increases in operating costs.
Operating profit for Q2 increased by 7.1% year-on-year to achieve 3.6437 trillion KRW, driven by mix improvement and price increase effects focused on high-margin models, industry-low incentive policies, stabilized raw material prices, and favorable exchange rate effects. This marked the highest operating profit in a quarter, achieving record-breaking results for two consecutive quarters following Q1 this year.
The operating profit margin also reached 13.2%, surpassing the previous quarter’s 13.1% to achieve a record high.
In the first half of the year, cumulative results were ▲ sales of 1,555,697 units (down 1.3% year-on-year) ▲ revenue of 53.7808 trillion KRW (up 7.7%) ▲ operating profit of 7.0694 trillion KRW (up 12.6%) ▲ ordinary profit of 7.8245 trillion KRW (up 14.7%) ▲ net profit (including non-controlling interests) of 5.7657 trillion KRW (up 16.8%), achieving the highest first-half results on record in all managerial indicators except for sales.
■ Q2 2024 (April-June) Eco-Friendly Vehicle Sales
Kia’s eco-friendly vehicle sales in Q2 increased by 8.3% year-on-year to 162,000 units, supported by the new EV9 and a continued expansion of hybrid models, despite a slowdown in global electric vehicle growth. (Retail basis, rounded to the nearest hundred)
The share of eco-friendly vehicle sales in total sales also rose by 2.5 percentage points year-on-year to 21.4%.
By type, sales included ▲ 89,000 hybrids (up 7.5% year-on-year) ▲ 20,000 plug-in hybrids (down 15.3%) ▲ 54,000 electric vehicles (up 21.8%).
By major markets, the share of eco-friendly vehicle sales reached ▲ domestic 39.7% (34.2% in the same period last year) ▲ Western Europe 38.6% (33.7% in the same period last year) ▲ United States 17.9% (16.5% in the same period last year), indicating an increase in the share of eco-friendly vehicles across all markets.
■ Future Outlook and Plans
Kia anticipates continuing difficulties in the management environment due to ongoing geopolitical risks, increased volatility from leadership changes in major countries, and a decline in consumer purchasing sentiment due to high interest rates and inflation.
In particular, they will closely monitor changes in the automotive market, including intensified competition among companies due to a slowdown in electric vehicle demand growth, maintaining appropriate inventory through a flexible production system based on market conditions and demand, and implementing optimal incentive strategies to simultaneously promote profitability and enhance customer value.
Domestically, Kia plans to continue expanding sales of popular RV models with hybrid lineups while leading the popularization of electric vehicles with the launch of the new EV3 and the start of sales of improved models of the EV6. Additionally, they plan to enhance sales momentum with the launch of improved models of the K8, which is set for a new model-level change.
In the United States, they will focus on enhancing residual values through efficient incentive policies to continue improving brand value, while pushing profitability and sales volume through the new enhancements of the Sorento Hybrid, Carnival Hybrid, K4, and other new models.
In Europe, Kia plans to enhance its electric vehicle lineup with the launch of improved models of the EV3 and EV6, while addressing sales lag in the first half by optimizing supply based on real demand for electric and hybrid models and increasing supply of compact vehicles.
By Lee Sang-jin daedusj@autodiary.kr