S.Korea's Kia Motors posts record 2001 net profit

SEOUL, Feb 18 Reuters reported that sales of more-expensive cars in the key U.S. market propelled Kia Motors Corp to a record net profit in 2001 even though South Korea's second-largest automaker by sales has not had a new model in more than a year.

Kia, which top-ranked Hyundai Motor Co rescued from near bankruptcy in 1998, said on Monday its net profit last year surged 67 percent year-on-year to 552.2 billion won ($423 million).

Sales rose 14.3 percent to 12.4 trillion won it said.

Kia shares ended up 6.9 percent on Monday at 10,800 won, while the broader stock market index closed up 0.87 percent.

``Rising sales of more expensive Optima mid-sized sedans and Carnival II minivans -- sold as the Sedona in the United States -- contributed largely to the increased sales,'' Kia said in a statement.

``The financial value of exports increased much more than the rise in the number of vehicles,'' it said.

Kia said the number of automobile exported during 2001 rose 9.1 percent year-on-year, but the sales amount rose 26.2 percent over the same period to six trillion won.

``Its domestic performance was not too exciting, but a lot of it was driven overseas. This year, a weak won is also going to help on the margin side,'' said Mark Barclay, an auto analyst at Samsung Securities.

Kia said its U.S. exports alone rose around 40 percent year on year to 233,485 units last year, while domestic sales rose 0.9 percent over the same period to 413,942 units.

The automaker's EBIT or operating profit last year rose 47.9 percent year-on-year to 522.2 billion won, while EBT or current profit rose 14.7 percent to 424.2 billion won.

LOOKING FOR A HOME RUN

Analysts said Kia was in line to see a greater growth momentum than Hyundai, which has only one new model debuting this year, aimed primarily at the smaller European market.

Kia plans to unveil a new sport utility vehicle, the Sorento compact SUV, later this month in South Korea and then in the key U.S. market mid-year. Its last new model was the Carnival II minivan launched in early 2001.

Kia aims to sell around 50,000 of the SUVs annually.

``If customers receive the Sorento as well as they did the (Hyundai) Santa Fe, it's going to be a home run,'' said Barclay.

Released in 2000, the Santa Fe was the best-selling SUV in Korea last year, while U.S. sales rose 542 percent year-on-year to 56,017 units in 2001, according to Hyundai.

Kia also did well to follow Hyundai's strategy overseas, analysts said.

``Like Hyundai, they did a lot in terms of marketing and warranties,'' Barclay said.

In addition to offering low-priced alternatives to its U.S. rivals, Kia offers a lengthy warranty covering 10 years on the engine and transmission and five years on everything else.

Kia, which has targeted this year's sales at 13.4 trillion won, saw January sales rise 7.2 percent year-on-year to 70,476 vehicles, while exports rose 1.8 percent over the same period.

Earlier this month, Hyundai announced a record 2001 net profit of 1.17 trillion won, up 75 percent year on year, on brisk sales of higher-priced automobiles in the local and U.S. markets.