Seoul, July 25 (IANS) Kia, South Korea’s second-largest carmaker, said on Friday its second-quarter net profit fell 23.3 per cent from a year earlier, impacted by newly imposed US import tariffs that took effect in April.
Net profit for the three months ended June declined to 2.26 trillion won (US$1.6 billion) from 2.95 trillion won a year earlier, the company said in a regulatory filing.
Operating profit fell 24.1 percent to 2.76 trillion won in the second quarter from 3.64 trillion won a year earlier, while sales rose 6.5 percent to 29.34 trillion won from 27.56 trillion won, reports Yonhap news agency.
“Higher incentives in major markets amid intensified competition and the enforcement of U.S. tariffs on imported vehicles affected the quarterly bottom line,” Kia said.
However, volume growth in key markets, higher average selling prices of high-end models and favourable exchange rates helped the company maintain its profitability fundamentals, it added.
On April 2, the U.S. government began imposing 25 percent tariffs on all imported vehicles. The South Korean government is seeking to negotiate a reduction in the tariff rate for Korean vehicles before the Aug. 1 deadline set by U.S. President Donald Trump.
Kia said its net income dropped 19 percent to 4.66 trillion won from 5.76 trillion won a year earlier in the first half.
Operating profit declined 18 percent to 5.77 trillion won from 7.06 trillion won over the cited period, while sales increased 6.7 percent to 57.36 trillion won from 53.78 trillion won.
The company said the 25 percent U.S. tariff alone reduced its operating profit by 786 billion won in the first six months of the year.
To minimize the impact of the tariffs in the second half, Kia plans to prioritize selling vehicles manufactured at its U.S. plants to American customers, rather than exporting them to Canada, Africa and the Middle East. The company also aims to lower sales incentives to preserve profitability.
Looking ahead, Kia said growing uncertainties surrounding U.S. trade policy, rising geopolitical risks and slowing global consumption are likely to continue weighing on vehicle sales.
To navigate these challenges, the company plans to boost sales of sport utility vehicles (SUVs) and fuel-efficient gasoline hybrid models in global markets, while preemptively expanding its electric vehicle (EV) lineup.
On Friday, Kia shares closed down 0.86 percent at 104,100 won, far underperforming the broader Korea Composite Stock Price Index (KOSPI), which rose 0.18 percent.
–IANS
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