SEOUL, Oct. 27 (Korea Bizwire) — Kia Corp., South Korea’s second-biggest carmaker, said Wednesday its third-quarter net profit rose sharply due to a lack of one-off costs, but chip shortages remain a major concern for the carmaker.
Net profit for the three months ended in September jumped more than eightfold to 1.135 trillion won (US$970 million) from a net profit of 133.68 billion won in the year-ago period.
Last year, the company put aside 1.013 trillion won in provisions for after-sales product quality maintenance and other services.
Some of the provisions were factored in the third-quarter bottom line. But this year there were no such one-off expenses, a company official said.
Kia expects the global chip shortage and increased volatility in exchange rates will continue to weigh on its fourth-quarter earnings.
“At stake is how many vehicles Kia will be able to produce until the first half of 2022 despite disruptions in the global chip supply chain,” Kia Chief Financial Officer Joo Woo-jeong said in the company’s earnings conference call.
He expected the company to fall short of its sales target of 2.92 million units for the year, due mainly to supply-side problems.
Annual sales are expected to be less than 2.9 million autos this year, the executive said.
In the January-September period, its sales rose 14 percent to 2,127,756 units from 1,864,137 a year earlier.
Operating profit jumped more than six times to 1.327 trillion won in the third quarter from 195.23 billion won a year ago.
Sales rose 8.8 percent to 17.752 trillion won from 16.321 trillion won during the same period.
Reduced incentives for U.S. buyers of Kia vehicles and increased sales of high-end SUVs helped boost the quarterly results, Kia said in a statement.
From January to September, net profit soared to 3.513 trillion won from 525.96 billion won in the year-ago period.