Company DigestCompaniesLast updated: 25 October 2024

Kia Q3 2024 Net Profit Rises 2.1% to 2.26 Trillion Won on New and Hybrid Models as Full-Year Guidance Is Raised

Kia Corp., South Korea's second-largest carmaker, closed the third quarter of 2024 with a net profit of 2.26 trillion won (about US$1.6 billion), up 2.1% from 2.22 trillion won a year earlier, as robust demand for new models such as the all-electric EV3 SUV and the upgraded K8 sedan, together with gasoline hybrid cars, offset slowing sales of electric vehicles. Operating profit rose 0.6% to 2.88 trillion won from 2.86 trillion won, and revenue grew 3.8% to 26.52 trillion won from 25.54 trillion won. A 630 billion won provision for engine warranty extensions in the U.S. market kept the bottom line from a higher result, while the company raised its full-year guidance on expected strong hybrid sales in the fourth quarter.

Electric car charging beside an apartment building

Q3 2024: profit growth on new and hybrid models

SEOUL, October 25, 2024 — Kia Corp. reported its results for the third quarter of 2024, as reported by the Yonhap News Agency. The second-largest carmaker in South Korea combined growth in both profit lines and in revenue despite sluggish industrial demand. Corporate announcements and investor materials of the company are published on its website at https://www.kia.com/.

The key reported figures for the third quarter of 2024 are as follows:

net profit — 2.26 trillion won (about US$1.6 billion), up 2.1% from 2.22 trillion won a year earlier;
operating profit — 2.88 trillion won, up 0.6% from 2.86 trillion won a year earlier;
revenue — 26.52 trillion won, up 3.8% from 25.54 trillion won a year earlier.

All three lines moved up, yet at a different pace: revenue grew the fastest at 3.8%, while operating profit added only 0.6% and net profit 2.1%. The quarter therefore shows a top line expanding faster than the profit lines, with the reported result still shaped by a one-off cost item.

The 630 billion won warranty provision

In the September quarter Kia put aside 630 billion won in provisions for engine warranty extensions in the U.S. market, which the company said kept it from posting a higher net result. Adding the provision back to the reported operating profit of 2.88 trillion won gives roughly 3.51 trillion won, equivalent to an operating margin of about 13.2% on revenue of 26.52 trillion won. The adjustment is arithmetic on the reported figures, and it shows how much of the quarter's earnings power was absorbed by the warranty item.

Demand drivers: EV3, K8 and gasoline hybrids

Robust demand for new models, such as the all-electric EV3 SUV and the upgraded K8 sedan, and for gasoline hybrid cars that offset slowing sales of electric vehicles helped prop up the quarterly results, the company said in its statement. At the same time Kia expected a slowdown in EV sales, geopolitical risks and higher costs deriving from tougher competition with rivals to remain major concerns for carmakers for the rest of the year.

To support growth, the company said it will focus on expanding sales of gasoline hybrid versions of its Sportage and Sorento SUVs, as well as the Carnival minivan, in the fourth quarter.

FY2024 guidance raised

Kia has revised up its earnings guidance for the year as it expects sales of gasoline hybrid models to remain strong in the fourth quarter. The maker of Sorento SUVs and K5 sedans is now targeting:

operating profit of 12.8 trillion to 13.2 trillion won for the full year 2024, up from the 12 trillion won target announced earlier in the year;
sales of 105 trillion to 110 trillion won, up from the earlier target of 101.1 trillion won.

Both new targets sit above the figures announced earlier in the year, and the revision frames the fourth quarter: the guidance increase rests on hybrid sales remaining strong, the same demand factor that supported the third quarter.

Model pipeline and shareholder returns

"In the next two years through 2026, we will launch a record number of new models, which will offer us an opportunity to make a leapfrog in the market," Kia Chief Financial Officer Joo Woo-jeong said on the company's conference call. Starting with the launch of a mini SUV in India in January, Kia plans to introduce the all-new Tasman pickup truck, as well as the Telluride flagship and Seltos compact SUVs, in global markets, and to release the new battery-powered EV4 and EV5 despite the so-called EV chasm, the pause that occurs before the widespread adoption of pure electric cars.

On the shareholder side, the company plans to cancel the remaining half of 500 billion won worth of treasury shares it repurchased in the first half within the year, to enhance shareholder value; the other half was already canceled in May.