Kia's 4th-Quarter Profit Nearly Doubles, Shares Rise

Kia Motors, South Korea's No.2 automaker, said on Thursday its quarterly net profit had almost doubled, fueling hopes a softer currency may help it weather a devastating industry downturn.

CNBC.com

The outlook for Kia is grim among a global recession and financial crisis that have hit worldwide car sales and squeezed credit.

The maker of the Morning minicar, however, is expected to weather the storm better than many of its peers, analysts said.

"Given slowing global car demand, the worldwide industry outlook is dark. But Kia is expected to improve its earnings further on a weaker won and small cars, especially from the end of the second quarter when global economic stimulus packages are likely to take effect," said Song Sang-hoon, an auto analyst at Kyobo Securities.

For all of 2009, Kia is expected to post a 472.1 billion won ($345.1 million) net profit, up from a 113.8 billion won profit last year, according to a poll of 20 brokerages by Reuters Estimates.

The company's sales volume is seen down 0.4 percent to 1.34 million vehicles this year, a Reuters poll of 10 analysts showed, while J.D. Power and Associates estimates overall global auto sales will fall by at least 8 percent.

Kia reported a 74.8 billion won net profit during the fourth quarter of 2008, beating a 71.7 billion won profit forecast in a Reuters poll of 10 analysts.

The figure compares with a 38 billion won profit a year ago and a 22.1 billion won net loss in the third quarter of 2008.

Shares in Kia turned higher on the unexpectedly healthy net profit figures, rising as much as 2.36 percent to 7,200 won.

But the maker of the Forte compact car posted an operating profit of 35.9 billion won in the quarter ended on Dec. 31, sharply below a 157 billion won profit forecast.

That compared to a 98 billion won operating profit a year earlier and a 53.7 billion won profit in the third quarter of 2008.

Kia's operating profit failed to meet market expectations due to higher marketing costs and as the company provided financial support to overseas units, company officials said.

Sales rose 7.4 percent to 5.04 trillion won during the October-December period from a year before as a weaker won bolstered overseas sales.

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The South Korean currency fell 32 percent versus the dollar in the fourth quarter from a year earlier on average and 22 percent from the previous quarter, data from South Korea's central bank showed.

Kia's results came before its affiliate Hyundai Motor announces its quarterly earnings later in the day.

The country's top automaker is expected to post a 52 percent jump in net profit to 513.5 billion won in the last quarter of 2008 from a year ago, also helped by a softer won, according to a Reuters poll of 11 analysts.

Shares in Kia, valued at $1.8 billion, had risen 9.9 percent so far this year as of Wednesday, outperforming a 1.9 percent fall in the wider market, after more than halving in the fourth quarter of 2008.

Kia's stock trades at about 14.00 times forecast 2009 earnings, compared to Hyundai's 6.32 times, according to Reuters data.

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