South Korean automaker Kia saw its fourth quarter net profit tumble 54 percent because the company was dearly hit by the Russian rouble plunge – with the market being one of the most important for the carmaker.
In Russia, where political and economical turmoil led to a huge depreciation of the local currency, Kia ranks second after domestic brand Lada. Because the quarterly earnings have been closely related, Kia saw a fourth-quarter net profit of just 436 billion won ($402.10 million), compared to 949 billion won posted during the same period of 2013. The South Korean carmaker, which ranks as the fifth-largest in the world together with its bigger brother Hyundai, said that its Russia deliveries this year could drop 12 percent, with the ruble’s continued slump prompting higher prices which, in turn, affect growth. Hyundai Motor itself recently announced that its own fourth-quarter profit fell 19 percent, affected by the Russian currency headwinds and the higher level of incentives needed to combat rising Japanese rivals on the US market.
Kia and Hyundai jointly own a factory in Russia, managing to produce locally around 45% of the vehicles they sell there – with the former importing the rest from Korea and Slovakia. The imports include many higher-priced, higher-value models such as the midsize Optima sedan and the Sportage and Sorento compact SUVs, according to a company official. According to figures from the Moscow-based Association of European Business (AEB), Kia’s Russian deliveries last year modestly slowed by 1 percent to 195,691 units.
Via Automotive News Europe