Today, we have some really positive and encouraging news coming from Kia’s headquarters in Seoul. It was announced that the company achieved better than expected operating profit in the fourth quarter of 2007!

Kia managed to swing from last year’s fourth quarter loss of 55 billion won, to 97,7 billion won of operating profits. The turnaround came as a result of won currency falling 9,3 percent against Euro, higher car sales and production cost cutting strategy.

Kia also provided upbeat targets as it works to save costs and raise profitability at overseas operations. It is aiming to post a 3 percent operating profit margin in 2008 versus negative margin last year.

Introduction of five new models is expected to boost Kia’s 2008 sales by 22,5 percent. The company plans to introduce revamped Cerato, also known as Spectra, and a small crossover utility vehicle in September. Facelifted version of Lotze (Optima) will also go on sale in Korea later this year.

Sales of Mohave SUV and facelifted Morning minicar, that went on sale in Korea earlier this month, are already posting stronger than expected sales results! New models are likely to lift Kia’s sales and profits in Korea, a market that carries high margins, and also overseas.

SEOUL, Jan 25 - Kia Motors Corp , South Korea’s No.2 auto maker, on Friday posted a better-than-expected quarterly operating profit, swinging from a loss a year ago, boosted by a weaker won and lower costs.

he turnaround helped Kia’s shares jump as much as 6.75 percent to 9,960 won during the morning, outperforming a 1.1 percent rise in the broader market .A softer won is expected to boost earnings at Kia this year as the maker of the Sportage sports utility vehicle sells about 80 percent of its products abroad.

The Mohave, also known as the Borrego, its recently launched SUV, and the revamped Morning minicar are likely to lift Kia’s sales in Korea, a market that carries higher margins.

But growth prospects in the United States and China, the world’s two top auto markets, are clouded by weak demand and fierce competition.

Rising prices of raw materials, a lack of a clear hit model and continuing losses at overseas sales units are other concerns for Kia, analysts said.

“Kia will benefit from the recent trend of rising demand for small cars amid higher oil prices and a softer won. Other new models are also expected to help the company further. But it still faces risks in overseas markets,” said Song Sang-hoon, an auto analyst at Heungkuk Securities.

Kia plans to launch a revamped version of the Cerato compact sedan and a small crossover utility vehicle in September.

For 2008, Kia, an affiliate of the country’s top car maker Hyundai Motor Co , is expected to post a sharp jump in net profit to 266.3 billion won this year, according to a poll of 26 brokerages by Reuters Estimates, almost 20 times last year’s 13.6 billion won profit.

Kia also provided upbeat targets as it works to save costs and raise profitability at overseas operations. It is aiming to post a 3 percent operating profit margin in 2008 versus a negative margin last year and expects a 22.5 percent rise in sales.

Kia reported a 97.7 billion won in operating profit during the fourth quarter of 2007 ended on Dec.31, beating a 54 billion won profit forecast by 11 analysts in a Reuters poll.

That compared with a 55 billion won loss a year ago and a 116.5 billion won loss in the third quarter.

The turnaround came as the won currency <EURKRW=R> fell 9.3 percent against the euro on a year ago and 4.5 percent from the third quarter, according to data from South Korea’s central bank.

October-December net profit was at 37.9 billion won, below an 80 billion won profit forecast, but compared to a 214 million won net loss a year earlier and 55.1 billion loss in the third quarter of 2007.

Fourth-quarter sales were 4.69 trillion won, compared to 5.09 trillion won a year earlier and 3.27 trillion won in the July-September period.

Still, weak demand in the United States and cut-throat competition in China could put a brake on Kia.

Some analysts say Kia is unlikely to show a big improvement in near-term earnings as the firm feels the lack of a hit model.

“The fourth quarter’s turnaround is not so meaningful. What Kia needs is a best seller like Hyundai’s Sonata. Kia’s earnings will get better maybe next year when it launches the next Sorento model,” said Yun Tae-sik, an analyst at Dongbu Securities, referring to the company’s SUV.

Kia will add four more new models in 2009. [Source: Reuters]