(ATTN: ADDS executives' comments in last 4 paras; RESTRUCTURES)
SEOUL, April 25 (Yonhap) -- Kia Motors Corp.'s first-quarter net profit jumped 50 percent from a year earlier on a provision reversal and a weak won, the company said Thursday.
Net profit for the January-March quarter jumped to 649 billion won (US$562 million) from 432 billion won in the year-ago period, Kia Motors said in a statement.
The reversal of 430 billion won worth of provisions for overdue wages payment was reflected in the quarterly bottom line, and the won's weakness against the U.S. dollar resulted in increased profit, the statement said.
Kia set aside about 1 trillion won in the third quarter of 2017 as a local court ordered the company to retroactively deliver overdue payments to its employees. The court said regular bonuses should be included in the "ordinary wage" used as the basis for calculating overtime, severance and other payments.
The company has recently completed overdue payments to its workers, and the remaining provisions were returned to the quarterly results, it said.
The won weakened to an average of 1,125.08 against the dollar in the first quarter from 1,072.29 a year ago. A weak won drives up the value of dollar-denominated earnings when carmakers convert them into the local currency.
Operating profit almost doubled to 594 billion won in the third quarter from 306 billion won a year ago. But sales fell 0.9 percent to 12.44 trillion won from 12.56 trillion won during the same period.
In the first three months, Kia sold a total of 648,913 vehicles in global markets, up 0.5 percent from 645,495 units in the same period a year ago.
To achieve this year's sales target of 2.92 million units, Kia will strengthen its SUV lineup with new models. It plans to launch a compact SUV in global markets and the upgraded Mohave SUV in the domestic market in the second half.
Overseas, Kia will promote the all-new Soul boxcar in the U.S. and SUV models in emerging markets such as Russia and Mexico in the second half.
Robust sales of the Telluride in the United States and an increased unit sale price helped drive up the operating income. Sales fell as domestic sales declined due to a lack of new SUV models, the statement said.
The Telluride is produced at Kia's U.S. plant and sold only in North American markets.
"We are targeting an operating income to sales ratio of over 5 percent in 2022 by strengthening the lineup with competitive SUVs and volume models such as the K3, K5 and K7 sedans," Kia Chief Financial Officer Joo Woo-jeong said on a conference call about the quarterly results.
Kia posted an operating income to sales ratio of 4.8 percent in the first quarter.
Kia has strengthened its SUV lineup to absorb growing demand for recreational vehicles in global markets. Its lineup includes the Sportage SUV, Soul boxcar, Stonic subcompact SUV and the fuel-efficient Niro.
Asked if Kia has a plan to sell the Telluride in the domestic market, Kia Vice President Kim Nam-kyu said, "We will focus on the Mohave to be launched domestically in September and may consider bringing the Telluride depending on sales of the Mohave and market demands."
S. Korea embraces deepening trade row as Japan considers additional measures
S. Korea expands 5G user base, but quality remains issue
S. Korean shipbuilders striving to break GTT monopoly in LNG containment systems
Japan's export curbs to weigh on S. Korean tech firms
Tada struggles to go beyond legal gray area in S. Korean taxi market