SEOUL -- Kia Motors Corp., South Korea's second biggest automaker, reported on Friday quarterly net profit edged down as a halving of domestic sales more than offset foreign demand for its Sorento sport utility vehicle.
Analysts said domestic sales, hit by tighter lending rules and a mountain of unpaid credit card bills, have cast a shadow over the near-term outlook for sales.
Kia, which controls 23.8 percent of South Korean auto market, has faced increased competition as smaller rivals such as GM-Daewoo Automotive Co. and Renault-Samsung Motors Co. gear up their marketing efforts.
"It will be a challenging year for Kia," said Kim Hag Ju, an auto analyst at Samsung Securities. "Competition is heating up on a home turf and Kia, with a low brand image abroad, will see marketing costs and incentives continuing to grow."
Kia, which is controlled by Hyundai Motor Co., the country's top automaker, reported a net profit of 290.7 billion won ($249.1 million) for the fourth quarter ended December 31, according to Reuters calculations. It compared with a profit of 292.8 billion won a year ago.
The weak quarterly earnings contrasted who those of Hyundai Motor, which reported an 80 percent jump in quarterly profit, fuelled by record U.S. sales of its New Sonata sedan and Santa Fe sport utility vehicle.
POOR DOMESTIC SALES
Sales for the final three months rose to 3.94 trillion won ($3.38 billion), against 3.70 trillion won a year ago, taking sales for all of 2003 to 12.8 trillion won, compared with 12.16 trillion a year earlier.
Exports for the final quarter rose to 160,858 units from 154,306 a year earlier, while domestic sales more than halved to 51,936 versus 111,414, a Kia spokesman said.
He said details of quarterly results and other financial details would be announced at 3 p.m. (0600 GMT) on Monday. Kia is set to hold a session with analysts on Monday.
Kia also said in a filing to the stock exchange that the company would allot a cash dividend of 350 won per share this year, up from 250 won the previous year.
The auto sector, which accounts for roughly eight percent of South Korea's gross domestic product, has said it expects 2004 to be a bumper year.
But sales at five auto firms slid 9.8 percent to a combined 277,161 vehicles in January from 283,561 in the same month a year ago. Local sales tumbled 39 percent to 75,791, eclipsing a 27 percent jump in exports to 201,367 units.
Analysts were mixed on the sales outlook, with some pinning hopes on an expected revival in consumption and others cautious as inventories have risen, weakening export prospects.