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(3rd LD) Kia Motors Q4 net drops 1.2 pct on weaker overseas demand

All News 15:21 January 27, 2016

(ATTN: ADDS sales target for Niro in 3rd para from bottom; REPLACES last para with closing share prices)

SEOUL, Jan. 27 (Yonhap) -- Kia Motors Corp., South Korea's No. 2 automaker, said Wednesday that its fourth-quarter earnings dropped 1.2 percent on-year on weak demand in emerging markets and a one-off loss from its equity ties with affiliates.

Its net profit reached 430.8 billion won (US$359.5 million) during the October-December period compared with a profit of 436.2 billion won a year earlier, the company said in a regulatory filing.

Operating income grew 2.8 percent on-year to 514.4 billion won over the cited period and sales also rose 9.3 percent to 12.8 trillion won, it said.

The fourth-quarter earnings are far below the market consensus. Local brokerages predicted a net profit of 609.1 billion won, according to data compiled by Yonhap Infomax, the financial arm of Yonhap News.

The company explained that the drop in the fourth-quarter earnings was caused partly by losses from its equities tied to affiliates. It, however, did not reveal detailed information.

The won's ascent against other emerging countries' currencies is another reason that hurt its business during the fourth quarter, Han Chun-soo said during a conference call, adding that weak demand in emerging markets also ended up expanding spending on marketing and promotions.

For 2015, Kia Motors reported a net profit of 2.63 trillion won, down 12.1 percent from a year earlier. Its operating profit fell 8.5 percent to 2.34 trillion won.

The fall in full-year operating profit was attributed to its increased spending on marketing aimed at countering intensifying competition in global markets.

Its operating profit ratio fell to 4.8 percent from the previous year's 5.5 percent.

Kia Motors expects that changes in market situations this year will be "extreme," citing the slowing growth in major economies, low energy prices and intensifying competition among rival companies.

In a bid to tide over the challenges, the automaker said that it will focus on targeting global markets with enhanced brand recognition and competitive new vehicle models in major segments.

Kia Motors expects to sell 3.12 million cars this year, a 2.3 percent growth from last year, which is in line with its projection of 2.9 percent global sales growth.

It also sets the sales target for the Niro hybrid to be unveiled in the first half at around 65,000 units. The Niro SUV will mark the company's first dedicated hybrid model based on its own production platform.

In a separate filing, Kia Motors said that it will spend 441 billion won to pay 1,100 won per share in dividends.

Shares of Kia Motors closed up 3.18 percent at 48,600 won on the Seoul bourse.

kokobj@yna.co.kr
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