Korea Daewoo Motor Sales posts record H1 net

SEOUL, Aug 13 Samuel Len writing for Reuters reporterd that Daewoo Motor Sales Co, the marketing arm of South Korea's third largest automaker, said on Tuesday it posted record profit in its second quarter and first half, both figures up more than 270 percent on the year.

Second quarter net profit rose 273.8 percent on the year to 28.1 billion won, or $23.51 million, while first half net profit rose 272.5 percent on the year to 53.2 billion won, the company said in a statement.

Daewoo Motor Sales told Reuters last month it expected to post a record first half net profit, as Daewoo's Kalos compact passenger cars and other new models gain wider customer appeal ahead of the launch of a revived Daewoo Motor.

In April, General Motors Corp agreed to invest $251 million in a joint venture with Daewoo Motor's creditors, which will give the world's biggest automaker a 42.1 percent stake -- the largest -- while its business partners will hold 24.9 percent.

"An improved image due to GM's acquisition of Daewoo Motor's assets contributed to the increased profit," Daewoo Motor Sales spokesman Kim Ki-ho told Reuters.

Shares of Daewoo Motor Sales closed up 4.7 percent at 6,870 won on Tuesday, outperforming a broader stock market index that ended up 1.90 percent.

Analysts said improved earnings for the remainder of the year would depend on what changes, if any, GM would implement after the launch of the joint venture expected as early as September.

Among possible changes, "GM may lower the commission it pays Daewoo Motor Sales," said Song Sang-hoon, an auto analyst at Dongwon Economic Research Institute.

HALO EFFECT

Sales of Kalos and 2003 model Rezzo (minivan) have increased significantly since their release ahead of the launch of the GM-Daewoo joint venture, the company said.

Daewoo Motor Sales was left out of the GM joint venture, but will continue to serve as an independent domestic distributor.

Japan's top minivehicle maker Suzuki Motor Corp has said it would take a 14.9 percent stake in the GM-Daewoo joint venture, paying $89 million for the holding.

"Kalos sales have totaled 10,272 units since its launch in May, accounting for a 35 percent stake of the (domestic) compact passenger car market," Kim said.

Sales of the upgraded Rezzos, sold as the Tacuma in the United States, have also been brisk since their June launch, Kim said.

The company said sales during the second quarter rose 7.8 percent on the year to 957.6 billion won, while the first half rose 9.2 percent on the year to 1.8 trillion won.

First half operating profit rose to 58.2 billion won from 16.1 billion won a year ago, the spokesman said last month, confirming preliminary data from the regulatory Financial Supervisory Service. The company did not provide final EBIT or EBT figures for the second quarter or first half of this year.

Daewoo Motor Sales also attributed the latest results to restructuring measures since creditors stepped in with financial assistance after its parent Daewoo Motor entered court receivership in 2000.

"Restructuring, including a switch to a performance-based wage system for sales staff, also contributed to the increase," Kim said.

Daewoo Motor Sales laid off 12 percent of its workforce or nearly 400 of its 3,400 workforce in February. Some 520 employees opted for voluntary retirement last year.