Kia Motors’ operating profit dropped 51% year on year to KRW404.2bn (US$377m) in the fourth quarter ended 31 December 2012, from KRW826.9bn, as the South Korean won’s gains eroded the value of exports. Net income declined 6.7% to KRW737.5bn.

Kia’s CFO Park Han Woo told Bloomberg News, “We expect a difficult year both at home and abroad and expect this year’s profits to be similar to 2012.”

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Provisions for overstating fuel efficiency ratings also hit Kia’s earnings. Both Kia and parent Hyundai overstated the fuel efficiency of some models in the US in 2012 incurring costs of around KRW200bn in fourth quarter earnings to reimburse customers.

NH Investment and Securities’ analyst Lee Sang Hyun said: “The results were far worse than I had expected. I don’t think we can expect profitability to improve anytime soon.”

Han Woo expects 2013 to be a “difficult year” with the won strengthening 4.4% against the dollar last quarter, more than any other major Asian currency. Hyundai Motor expects further strengthening in the won in 2013, which would restrict exports.

Kia expects deliveries to grow 1.1% to 2.75m vehicles in 2013, the slowest pace since 2006. Kia’s sales in China rose 11% in the last quarter as consumers preferred its vehicles over Japanese auto brands. Han Woo said this helped boost quarterly net income since gains from China are reported as equity interests and not reflected in the operating income figure.

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The automaker expects to sell around 500,000 units in China in 2013, after increasing deliveries 11% to 480,566 vehicles in 2012.

Kia’s Europe sales grew 14% in 2012, driven by the cee’d hatchback and Sportage SUV and the company intends to raise sales 1% to 335,000 units in 2013. In the US, Kia aims to boost sales 2.2% to 570,000 units in 2013, compared with a rise of 15% in 2012.