SEOUL, Jul. 23 (Korea Bizwire) — Kia Motors Corp., South Korea’s second-biggest carmaker by sales, on Tuesday said its second-quarter earnings jumped 52 percent on a weaker local currency.
Net profit for the April-June period soared to 505 billion won (US$430 million) from 332 billion won a year earlier, Kia said in a statement.
“The won’s weakness against the U.S. dollar was the main contributor to the increased net profit. Decreased U.S. incentives and lower global inventories also buoyed the bottom line, offsetting weak sales at home and in China,” a company spokesman said.
The Korean won fell to an average of 1,165.91 against the U.S. dollar in the second quarter, from 1,078.57 in the same period a year ago, according to the Bank of Korea.
A weak won makes South Korean exports more price competitive overseas and lifts the value of repatriated profit.
Lack of new models weighed on domestic sales in the second half, and sales in China, the world’s biggest automobile market, continued to fall in the face of a slowing economy, a trade war with the U.S. and a lack of competitive models, Kia said in a statement.
In contrast, the Telluride SUV and the Soul boxcar helped boost U.S. sales. The Telluride, produced in Kia’s U.S. plant, was launched in the U.S. last year and sold only in North American markets.
“The company will expand its Georgia plant this year to produce over 80,000 Palisades a year from the current 64,000 units to meet rising demand for the model,” Kia Senior Vice President Joo Woo-jeong in charge of the finance and accounting division said on a conference call with analysts after the release of the quarterly results.
He said if the production of the entry-level Seltos SUV at Kia’s 300,000-unit-a-year plant in India will begin operations later this month, it will give a big boost to the company’s bottom line through next year.
On top of the Seltos launched this month in Korea, Kia plans to add the upgraded flagship Mohave to its SUV lineup later this year to boost sales.
Kia has strengthened its SUV lineup with competitive models to take advantage of rising demand for recreational vehicles.
Kia’s SUV lineup is composed of the flagship Mohave, midsize Sorento, compact Sportage, subcompact Stonic, Soul boxcar and Niro hybrid models.
The company’s operating profit jumped 51 percent to 534 billion won in the second quarter from 353 billion won a year ago. Sales were up 3.2 percent to 14.51 trillion won from 14.06 trillion won.
From January to June, Kia saw its net profit jump 51 percent to 1.15 trillion won from 764 billion won a year earlier.
Its first-half operating profit soared 71 percent on-year to 1.13 trillion won on sales of 26.95 trillion won for a 1.2 percent on-year gain over the cited period.
In the first half, Kia sold a total of 1,352,629 vehicles, down 2.4 percent from 1,386,408 units in 2018, achieving 46 percent of its annual sales target of 2.92 million units.
On Monday, Hyundai Motor Co., which owns a 34 percent stake in Kia, reported a 23 percent on-year gain in second-quarter net profit at 999 billion won, helped by a weak won and strong sales of new models, such as the Palisade SUV.