Kia swings to profit in third quarter after 2017 one-off
In this article (5)
Kia Motors Friday reported a swing to profit in the third quarter from a loss a year earlier. For the three months ending Sept. 30, Kia posted a net profit of 297.74 billion won ($262 million) from a net loss of 291.77 billion won a year ago, the company said in a statement.
“In the third quarter of 2017, a one-off cost of 864.1 billion won was reflected in the bottom line when a local court ordered the company to retroactively make an overdue payment to employees,” a company spokesman said.
According to the court ruling issued in August last year, regular bonuses are to be included in the “ordinary wage” used as the basis for calculating overtime, severance and other payments.
The won’s strength against the dollar and currencies in emerging markets also weighed on the quarterly net results, the company said.
Kia reported an operating profit of 117.28 billion won in the third quarter from an operating loss of 427.02 billion won a year earlier. Sales fell 0.24 percent to 14.074 trillion won from 14.108 trillion won over the same period, it said.
Questions & Answers
Q.What was the main reason for Kia's loss in the third quarter of 2017?
What was the main reason for Kia's loss in the third quarter of 2017?
The loss was primarily due to a one-off cost of 864.1 billion won. This expense arose from a court order requiring Kia to retroactively make overdue payments to its employees, which impacted the bottom line significantly.
Q.How did the recent court ruling affect Kia's calculation of employee payments?
How did the recent court ruling affect Kia's calculation of employee payments?
The court ruling mandated that regular bonuses must be included when calculating the 'ordinary wage'. This 'ordinary wage' is then used as the basis for determining overtime, severance, and other employee payments.
Q.Did Kia's sales increase during the recent third quarter compared to the previous year?
Did Kia's sales increase during the recent third quarter compared to the previous year?
No, Kia's sales actually saw a slight decrease in the recent third quarter. Sales fell by 0.24 percent, from 14.108 trillion won in the previous year to 14.074 trillion won in the latest period.
Q.What currency factors impacted Kia's net results in the third quarter?
What currency factors impacted Kia's net results in the third quarter?
The company stated that the strength of the Korean won against the US dollar was a negative factor. Also, the won's strength against currencies in emerging markets also weighed on the quarterly net results.
Reader pulse
Is Kia's profit rebound sustainable?
18,148 votes so far