Kia Motors posted a 42% drop in quarterly profits on Friday, hit by a stronger won, higher steel prices and hefty marketing costs, and cut its sales forecast for this year, according to a Reuters report.
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The Hyundai affiliate reportedly has scaled back its 2005 sales target to 1.21 million units from an earlier 1.34 million.
According to Reuters, it also said total investments for 2005, including spending at home, would fall to 1.29 trillion won ($US1.26 billion) from last year’s 1.42 trillion won.
“We don’t expect a significant recovery in earnings till the third quarter when consumers are expected to start spending on big ticket items like autos,” Suh Sung-moon, an auto analyst at Dongwon Securities, told Reuters, adding: “The business environment is not so favorable for Kia,” in reference to the won’s uptrend and rising steel prices.
Reuters said Kia’s net profit for the three months to December 31 dropped to 168.1 billion won ($164 million) from 290.7 billion a year earlier, while sales rose 17% to 4.6 trillion won.
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