▲Kia 2022 Q1 Business Results Summary (Revenue, Operating Profit, Net Income unit: 100 million won, Sales Volume unit: units)



Revenue up 10.7% YoY, Operating Profit up 49.2%
Securing high-margin vehicle-focused sales structure…Expanding revenue and profitability

Kia's sales and profitability increased significantly year-over-year through a "getting fair value" pricing strategy involving reduced incentives and a sales structure centered on high-margin vehicles with strong product competitiveness, despite some production constraints caused by ongoing semiconductor supply shortages and parts supply disruptions stemming from deteriorating international conditions, which led to decreased wholesale sales.

Kia Corporation held a corporate briefing (IR) via conference call at its headquarters in Yangjaedong, Seoul on the 22nd and announced that it sold 685,739 units (down 0.6%) in Q1 2022 on a wholesale basis, with the following business results: △Revenue of 18.357 trillion won (up 10.7%) △Operating profit of 1.6065 trillion won (up 49.2%) △Ordinary income of 1.518 trillion won (up 15.1%) △Net income of 1.0326 trillion won (down 0.2%). (IFRS consolidated basis)

Kia's global sales in Q1 2022 were △121,664 units in the domestic market, down 6.5% year-over-year △564,075 units overseas, up 0.7% year-over-year, for a total of 685,739 units globally, down 0.6% year-over-year on a wholesale basis.

Despite new Sportage launch effects and optimal production efforts, the domestic market declined 6.5% year-over-year due to production disruptions from semiconductor and other component supply shortages, which resulted in decreased sales of major models such as Sorento and Carnival.

The overseas market also experienced continued inventory shortages due to production disruptions from semiconductor shortages, but strong demand across all vehicle types continued in most regions. Through flexible production adjustments and redirecting Russian market sales volumes to other regions following shipment suspensions, sales disruptions were minimized, achieving significant sales increases in the North America, Europe, and India regions.

Q1 revenue reached 18.357 trillion won, up 10.7% year-over-year, despite decreased sales volume due to production disruptions. This was driven by higher average selling prices resulting from increased trim and specification levels of sold models and expanded RV proportions, along with won-dollar exchange rate appreciation.

The cost of revenue ratio improved by 2.1 percentage points year-over-year to 80.4%, as increased material costs and reduced sales volume were offset by significant revenue growth that diluted cost increases.

Operating profit improved significantly as Kia implemented a "getting fair value" pricing strategy by raising target profit margins by model type and substantially reducing incentives, leveraging improved product quality and enhanced brand recognition. This resulted in record-level average selling price increases.

The sales proportion of profitable RVs reached a record high of 61.3%, up 1.6 percentage points from the prior year period, and with favorable exchange rate effects, profitability improved significantly.

As a result, Q1 operating profit increased 49.2% year-over-year to 1.6065 trillion won, and the operating profit margin improved by 2.3 percentage points to 8.8%.

Meanwhile, Kia analyzed performance related to expanded eco-friendly vehicle sales as the company makes company-wide efforts for successful transformation into a "sustainable mobility solutions" company alongside the Q1 results announcement. (Retail sales basis hereinafter)

Kia's eco-friendly vehicle sales in Q1 this year reached 110,043 units, up 75.2% year-over-year, and the proportion of eco-friendly vehicle sales among total sales reached 15.8%, expanding by 6.9 percentage points from the prior year.

By type: △Hybrid vehicles composed of Niro, Sorento, and Sportage recorded 51,025 units (up 68.7% YoY) △Plug-in hybrid vehicles centered on Niro, Seed, and Sorento recorded 15,868 units (up 4.3% YoY) △Electric vehicles including EV6 and Niro EV recorded 43,150 units (up 148.9% YoY).

Particularly, in the domestic and Western Europe (EU+EFTA) markets, the EV6 that won the European Car of the Year award added to continued strong sales of the Niro EV, the existing flagship electric vehicle model, significantly expanding electric vehicle sales proportions to 7.6% domestically (2.7% last year) and 16.1% in Western Europe (10.6% last year).

Additionally, according to research by JATO, a global automotive industry research organization, Kia sold a total of 14,269 electric vehicles in the Western European market through February this year, recording an 8.7% market share and ranking as the second-place electric vehicle brand. (1st place: Tesla, 10.0%)

Last year, Kia sold a total of 63,419 units annually with a 5.4% market share, ranking 6th, but this year as EV6 sales ramp up, the company has established itself as a leading brand in the European electric vehicle market.

A Kia official stated, "Strong demand for Kia vehicles continues across all vehicle types and regions, and we are actively responding to production disruption environments through flexible production adjustments by model type and region. In Q2, we expect parts supply to improve and seasonal effects to materialize, leading to a full-scale recovery in sales."

While closely monitoring the continued COVID-19-related measures in some markets such as recent lockdowns in China's Shanghai region, rising raw material prices due to international instability, and concerns about reduced purchasing power due to inflation, Kia anticipates visible performance improvement from Q2 onward.

As domestic social distancing measures have been lifted recently, most COVID-19 impacts are expected to recede from Q2 onward, and semiconductor supply conditions are expected to ease somewhat, with global automobile demand projected to recover gradually.

Accordingly, Kia plans to maximize factory utilization rates in conjunction with improved parts and semiconductor supply conditions to rapidly absorb waiting demand and pursue sales expansion.

In particular, regarding the continued supply shortage despite strong demand sustained across all global regions, Kia will make every effort to resolve waiting demand through efforts including diversifying parts supply chains and maximizing available inventory and logistics efficiency.

Additionally, based on improved brand and product quality, Kia plans to continuously upgrade product and trim mix to maximize profitability.

Regarding the eco-friendly vehicle market, Kia anticipates that electric vehicle sales will expand even faster due to favorable global market reception of major electric vehicles such as EV6 and competitive new electric vehicle model launches by major automotive manufacturers.

Kia plans to intensify efforts in expanding eco-friendly vehicle sales, including the EV6 that proved its top-tier product quality by winning the European Car of the Year award and the new Niro, thereby increasing electric vehicle profitability and further strengthening brand positioning and electric vehicle market leadership as a "sustainable mobility solutions company."