Seoul: Kia Corp., South Korea's second-largest carmaker, announced on Friday that its net profit for the second quarter fell by 23.3 percent compared to the previous year, primarily due to the introduction of new U.S. import tariffs that began in April.
According to Yonhap News Agency, Kia reported that the net profit for the three months ending in June decreased to 2.26 trillion won (approximately US$1.6 billion) from the previous year's 2.95 trillion won. The regulatory filing also indicated a drop in operating profit by 24.1 percent to 2.76 trillion won from 3.64 trillion won, despite a 6.5 percent increase in sales, which rose to 29.34 trillion won from 27.56 trillion won.
Kia attributed the decline in profits to heightened incentives in major markets amidst increasing competition and the impact of U.S. tariffs on imported vehicles. However, the company also noted that volume growth in key markets, higher average selling prices of high-end models, and favorable exchange rates have aided in sustaining its profitability fundamentals.
The U.S. government started imposing a 25 percent tariff on all imported vehicles on April 2. In response, the South Korean government is actively pursuing negotiations to reduce the tariff rate for Korean vehicles before the August 1 deadline set by U.S. President Donald Trump.
For the first half of the year, Kia's net income dropped by 19 percent to 4.66 trillion won from 5.76 trillion won in the previous year. Operating profit also decreased by 18 percent to 5.77 trillion won from 7.06 trillion won, while sales saw a 6.7 percent increase to 57.36 trillion won from 53.78 trillion won.
Looking forward, Kia anticipates that ongoing uncertainties around U.S. trade policy, rising geopolitical risks, and slowing global consumption will continue to impact vehicle sales. To address these challenges, the company plans to enhance sales of sport utility vehicles (SUVs) and gasoline hybrid models globally, while also expanding its electric vehicle (EV) lineup preemptively.
As of 2:51 p.m., Kia shares declined by 2.19 percent to 102,700 won, significantly underperforming the broader Korea Composite Stock Price Index's (KOSPI) slight gain of 0.04 percent.