Kia Q3 OP down 11% on qtr on chip shortage, but income above $1 bn

South Korea’s second largest automaker Kia Corp. under Hyundai Motor Group suffered in its third-quarter performance from chip shortage, but nevertheless maintained income over $1 billion on robust sale of profitable SUVs.

In its regulatory filing on Wednesday, Kia said its consolidated operating profit for the quarter ended September reached 1.33 trillion won ($1.13 billion), losing 10.8 percent from a quarter ago but surging 580 percent from a year earlier, when its income statement reflected the loss reserves to cover recalls related to the quality defects of Theta 2 GDi engines.

Net profit also narrowed 15.5 percent from three months ago but jumped more than eight-fold from the previous year to 1.13 trillion won. Sales totaled 17.75 trillion won, off 3.2 percent on quarter but up 8.8 percent on year.

The results beat the market consensus of 1.25 trillion won in operating profit and 16.9 trillion won in revenue compiled by Seoul-based financial data provider FnGuide as of Oct. 24.

Kia shares on Wednesday closed 0.24 percent higher at 85,000 won in Seoul trading.

As with Hyundai Motor which reported earnings a day earlier, Kia also saw a profit decline on quarter due to slowed sales from disrupted factory operation amid protracted chip shortage.

Kia"s Sorento

From July to September, Kia sold total 684,413 units, down 2.1 percent on year due to delayed car deliveries despite high demand for its new releases. Domestic sales decreased 8.6 percent to 124,964 units. Overseas sales also inched down 0.6 percent to 559,449 units.

Prospects for the final quarter are also murky as normalization in output and chip issue is expected to go on for some time, according to the company.

To better prepare for unfavorable market conditions, Kia aims to maximize its production efficiency with chip inventory control for the rest of the year while focusing on sales of profitable recreational vehicle models and new releases with electrified lineups.

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