Kia reports drop in Q1 net profit amid chip shortage

Kia, South Korea’s second-largest carmaker, said on Monday that its first-quarter net profit fell 0.2 per cent from a year earlier due to one-off costs amid global chip shortages.

Net profit for the three months ended in March fell to 1.032 trillion won ($825 million) from 1.035 trillion won during the same period of last year, the company said in a statement.

In the first three months, Kia’s vehicle sales fell 0.6 per cent to 685,739 vehicles, including 564,075 units overseas.

Particularly, high-deferred corporate taxes were factored in the bottom line in the first quarter, a company spokesman said over the phone, without giving the value of the taxes, reports Yonhap News Agency.

Vehicle production and sales also declined in the first quarter due to continued semiconductor chip shortages and disrupted supplies of other parts due to the Russia-Ukraine war.

Operating profit jumped 49.2 per cent to 1.606 trillion won in the first quarter from 1.076 trillion won a year ago. Sales were up 10.7 per cent to 18.357 trillion won from 16.581 trillion won.

Increased sales of high-end environment-friendly models, including the all-electric Niro EV and EV6, in the domestic and European markets propped up the quarterly operating income.

In the January-February period, Kia ranked second just after US electric carmaker Tesla Inc. in terms of EV sales in Western Europe, according to market analysis firm JATO Dynamics.

Kia sold a total of 14,269 EVs to account for 8.7 per cent of Western Europe’s EV market, following Tesla’s 10 per cent, the JATO data showed.

Kia expected continued chip shortages, disrupted parts supplies due to the lockdown in Shanghai, and higher raw materials prices amid the Russia-Ukraine war will remain concerns for carmakers in the second quarter.

Once the chip supplies improve, the company said it will maximize the operation of its plants to meet pent-up demand and boost sales.