Kia Motors Corp. said Thursday its second-quarter net profit plunged 53 percent from a year earlier on weaker demand for its vehicles in China and the United States.
For the three months that ended on June 30, net profit declined to 389.6 billion won ($350 million) from 825.8 billion won a year earlier, the company said in a statement.
"On top of political tension with China over the installation of a US missile defense system in South Korea, which Beijing objects to, high US incentive costs and the won's strength against the dollar also weighed on the quarterly results," the statement said.
(Yonhap)
Looking ahead, the country's second-largest carmaker warned of a tough second half as sales in China and the US are likely to remain weak throughout the year.
To offset declines in the two major markets, Kia will focus on Europe by launching its new subcompact SUV Stonic in September and the Stinger sports car in October, Kia Executive Vice President Han Chun-soo said in a post-earnings conference call.
Kia shares were trading 0.81 percent lower at 36,600 won as of 11:06 a.m. The broader KOPSI was up 0.27 percent.
Operating profit fell 48 percent to 404 billion won in the second quarter from 770.9 billion won a year ago. Sales were down 6.0 percent to 13.578 trillion won from 14.450 trillion won during the same period in 2016, it said.
In the January-June period, net profit dropped 35 percent on-year to 1.155 trillion won. Operating profit plunged 44 percent to 786.8 billion won and sales were off 2.5 percent to 24.42 trillion won.
Kia sold a total of 1.32 million cars in the first half, a decrease of 9.5 percent from 1.46 million units. In particular, its sales in China nosedived 55 percent to 285,590 units from January through June.
On Wednesday, Hyundai Motor Co. posted a 48 percent on-year slump in its second-quarter net profit at 914 billion won as lower sales in China cut into its bottom line.
Hyundai and Kia, which together form the world's No. 5 carmaker, will put a top priority on improving profitability in the second half, corporate sources said. (Yonhap)
