July 27, 2012 - 13:40 AMT
PanARMENIAN.Net - Kia Motors, South Korea's second-largest automaker, reported lower-than-expected quarterly earnings Friday, July 27, as losses on stakes in affiliates offset strong demand for its compact cars, AP reports.
Its April-June net profit fell 3 percent from a year earlier to 1.1 trillion won ($964 million). Analysts had forecast earnings of 1.3 trillion won. Profit was dented by falls in the value of its stakes in affiliate companies such as Hyundai Steel, and the year earlier result had been inflated by its sale of shares in Hyundai Wia.
But Kia reported higher quarterly operating profit and revenue as strong sales in the United States, Europe and China countered a slowdown in the South Korean auto market. It benefited from South Korea's free trade agreement with the European Union and demand for smaller, fuel efficient cars.
Its second-quarter operating profit rose 18 percent over a year earlier to 1.2 trillion won. Revenue grew 8 percent to 12.6 trillion won. Kia shares closed 0.1 percent higher in Seoul.
Kia, which is part of the world's fifth-biggest automaker Hyundai Motor Group, sold 1.39 million vehicles in the first six months of this year, up 12 percent from a year earlier.
The figure puts Kia on track to meet its annual sales target of 2.71 million vehicles, its chief financial officer Park Han-woo said at a conference call.
Kia enjoyed lower tariffs on its vehicles exported to Europe after South Korea's free trade agreement with the European Union went into effect in July 2011. Its vehicle shipments to Europe jumped 25 percent over a year earlier in the January-June period, reflecting demand for Kia's compacts.
Sales to the United States grew 18 percent, mainly driven by sales of K5 sedans and the Sorento. In China, sales expanded 16 percent, making up for the 4 percent drop in the South Korean market.
Park said the company is targeting sales of 3 million vehicles in 2013.