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Kia posts record-high operating profit but fails to meet market consensus

Published: 25 Oct. 2024, 16:48

CHO YONG-JUN
[email protected]

Kia's EV3 on the road. It is the brand's smallest and most affordable EV yet in its all-electric range. [KIA]

Kia reported a record-high operating profit of 2.88 trillion won ($2.08 billion) on Friday but failed to meet the market consensus due to the cost linked to a warranty extension.

The operating profit for the July-September period was 0.6 percent higher on year and the highest for a third quarter, but was lower than the market consensus of 3.11 trillion won, as compiled by market tracker FnGuide.

The automaker registered revenue of 26.5 trillion won for the July-September period, 3.8 percent higher on year.

Its net profit increased by 3.8 percent year on, at 2.27 trillion won.

Kia’s revenue and net profit are the highest for the third quarter for the company.

Kia said the lower-than-expected numbers resulted from a preemptive warranty extension of its Lambda II engine unit in North America, which cost the company a one-time expenditure of 630 billion won in contingent liability. The engine warranty extension affects Kia’s K7 sedan and Sorento SUV, model year 2014-2017.

“It’s not a safety issue but an engine manufacturing issue,” Kia said, adding that no further cost would be needed.

Hyundai Motor, too, had recorded a weaker-than-expected operating profit Thursday, hit by costs linked to the warranty extension.

BY CHO YONG-JUN [[email protected]]