Korean automaker logs record revenue in Q3, yet profit cut in half

Kia headquarters in Seoul (Hyundai Motor Group)
Kia headquarters in Seoul (Hyundai Motor Group)

Kia said Friday that it expects the United States tariffs on auto imports will likely deal a blow to its fourth quarter earnings despite Korea reaching an agreement with the Trump administration to lower the current tariffs of 25 percent to 15 percent.

“Even if the (reduced tariff) is applied as of Nov. 1, the 25 percent tariff was already paid on existing inventory,” Kim Seung-jun, chief finance officer at Kia, said during the company’s conference call.

“Though we expect to see the impact (of the 15 percent tariff) in December sales, (fourth quarter numbers) will likely not differ much from the third quarter.”

The Korean government announced Wednesday night that Seoul and Washington had reached an agreement to set the tariff rate on Korean-made, US-bound autos and auto parts at 15 percent.

From July to September, Kia logged 28.7 trillion won ($20 billion) in revenue, its largest-ever in a third quarter, up 8.2 percent from the same period last year.

However, the Korean automaker's quarterly operating profit was cut to almost half of last year’s figure at 1.46 trillion won. The initial 25 percent tariff imposed by the US caused a steep decline in profit as its impact began to be felt in the third quarter.

Of the 785,137 Kia vehicles sold across the world in the third quarter, about 200,000 were hybrid and electric vehicles, up 32.3 percent from the same period last year, thanks to strong demand for the eco-friendly cars in Western Europe and the US.

On top of it upcoming cycle of new EV releases slated for global markets, Kia said it will continue to expand its hybrid lineup to push for growth acceleration and market dominance.


hwkan@heraldcorp.com