Kia Profits Tumble 35% In First Quarter

Kia Motors Corp. posted a 35 percent drop in first-quarter profit after production at its main domestic factories fell and the won strengthened against the yen.

Net income declined to 783.9 billion won ($707 million), from 1.2 trillion won a year earlier, the company said today in a statement. That lagged behind the 836 billion won average estimate of 19 analysts surveyed by Bloomberg for 28 days. Revenue fell 6 percent, though CFO Park Han Woo forecast sales in the current quarter will be higher than in the first.

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nguyenvuminh - 4/26/2013 11:44:31 AM

+1 Boost

The good thing is that this may prompt Hyundai/Kia to increase its production capacity here in its main export market to blunt future currency swing.

HughJass - 4/26/2013 12:22:13 PM

+1 Boost

That would be good, but it doesn't keep their own people employed. Selling a low prices and high volume keeps people working and not complaining.

I'd put my money on the Korean government doubling the efforts of its official policy of devaluing the Won to give their exports an advantage over the Japs.

nguyenvuminh - 4/26/2013 2:14:42 PM

+1 Boost

HughJass, it's going to be a combination of maintaining their currency at a competitive level plus their own investment. It's not a one solution process.

HughJass - 4/26/2013 4:49:04 PM

+1 Boost

No, South Korea is a one trick pony and we white people welcome it if it means we get a tv for twice the size at half the price.
http://www.livemint.com/Opinion/B3GpxpUWVqqHKbcvJAFZ3O/Currency-wars-Gangnamstyle.html

"Korea’s outperformance can be partly explained by the remarkable devaluation of the won against the yen since the crisis began building in the summer of 2007.
For a variety of reasons, the won, which had previously been worth about 0.13 yen, fell to about 0.07 yen—a decline of more than 45%. Korean and Japanese firms compete head-to-head...The dramatic change in their relative terms of trade was a boon to Korean exporters, at the expense of their Japanese rivals."

"It’s also possible that the Bank of Korea may start intervening in the currency markets to preserve the won’s competitiveness. We shouldn’t be surprised if Japan’s biggest commercial rival fights back against the reflationary policies emanating from Tokyo."