January 29, 2010 / 2:50 AM / 10 years ago

Kia reports record profits; outlook bright

SEOUL (Reuters) - Kia Motors, South Korea’s No. 2 automaker, on Friday reported stronger-than-expected quarterly profit, bolstering hope it will continue to outpace rivals despite a strong won and an end to government handouts to car buyers.

Earnings at Kia (000270.KS), an arm of world No. 4 carmaker Hyundai Motor Group, are expected to climb again this year as the global economic recovery, a better image and higher quality cars spur sales, analysts said.

That may offset a stronger won currency and the end of government incentives for car buyers.

“Kia will keep growth momentum this year, led by new models, and as its sales outlook in China and the U.S. is bright, especially with troubles of Toyota (7203.T),” said Koo Zayong, co-head of equity research at Nomura International Ltd in Seoul.

“A firmer won will not be an issue if it gains at a steady speed.”

Kia aims to raise global sales volume by 26.5 percent to 1.94 million vehicles this year, with a 36.7 percent jump in China and a 15.6 percent growth in the United States.

Kia is set to launch the revamped Sportage, its flagship sport utility vehicle (SUV) after introducing the K7 mid-sized sedan in November last year.

Kia reported a record net profit of 603.9 billion won ($524.2 million) for the fourth quarter, nearly double analysts’ consensus forecast of 310.9 billion won.

That compared with a 74.8 billion won profit a year earlier and 402.0 billion won in the third quarter of the last year.

The maker of the Soul compact car posted an operating profit of 411.8 billion won during the quarter ended Dec 31, 2009, above a forecast for 328.0 billion won profit.

Sales grew 13.6 percent from a year earlier to 5.73 trillion won.

After the results, shares in Kia rose 0.25 percent to 19,700 won as of 0244 GMT, outperforming a 1.73 percent loss in the wider market .KS11.

The results came after the Korean won rose 1.2 percent in the fourth quarter and strengthened 8.2 percent over the year.

Investors fear continued strengthening in the local currency could hurt exports and stall Kia’s earnings growth, which knocked its shares down 2 percent this month in a slightly firmer market after the currency hit a 15-month high.

On Thursday, its affiliate Hyundai Motor Co (005380.KS) posted a record quarterly operating profit. ($1=1152.0 Won) (Editing by Ken Wills)

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