South Korea’s second largest automaker Kia Motors Corp. posted a 43.2 percent on-year decline in its operating profit for the fourth quarter ended December last year under triple whammies of higher fixed costs from legal dispute with the union, strong won and sluggish sales in China.

Kia Motors announced in its regulatory filing on Thursday that its operating profit during the October to December period last year amounted to 302.4 billion won ($284.5 million), down 43.2 percent from a year earlier. Sales rose 0.7 percent to 13 trillion won, but net profit plunged 67.3 percent to 104.8 billion won over the same period.

As of 1:34 p.m. on Friday, shares of Kia Motors fell 1.77 percent to 33,300 won in Seoul trading.

For full 2017, operating profit on a consolidated basis plummeted 73.1 percent from the previous year to 662.2 billion won, lowest since the company complied with the International Financial Reporting Standards (IFRS) from fiscal 2010. Sales were up 1.6 percent to 53.5 trillion won. Its operating margin dropped 3.5 percentage points to 1.2 percent.

An official from the car maker said it was hit hard by the one-off expense it had booked due to the defeat in labor lawsuit over base salary scope, strong won and weak demand in the Chinese market. The company reflected more than 1 trillion won in loss reserve in the third quarter last year as a Seoul court in August ruled that it should pay 422.3 billion won, 38.7 percent of what its union had demanded by identifying regular bonuses and meal allowances as base salary.

The car maker sold 2.76 million units of its vehicles in the global market last year, down 8.6 percent from a year ago. Its sales in the Chinese market fell by 262,000 units.

An official from the company said it will make extra efforts to improve profit by releasing new models and expanding sales, and focus on research and development in green cars and smart cars.

By Lee Seung-hoon and Choi Mira

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]