Kia profit down 25%in FY22 as tax outgo slams the brakes

Kia India, the local arm of the South Korean carmaker, saw its net profit drop by a fourth in 2021-22 (FY22) over the yearago period, notwithstanding an operationally strong year. An increase in the total tax outgo during the year dented the company’s earnings.

Kia is one of the few unlisted global carmakers in India that saw a contraction in profits. It was a year of record net profit for the India arms of Toyota Motor Corporation, Honda Motor Company, Renault SA, Bayerische Motoren Werke AG (BMW), and Mercedes-benz, to name a few.

This was led by a combination of factors, including strong demand, sharp increase in car prices on the back of high input costs, and an improved model mix, leading to an increase in profits. Stringent cost curtailment and rationalisation measures, too, helped.

The narrative at Kia would have been the same, but for the higher tax outgo.

Driven by a sharp jump in deferred taxes — ~243.6 crore in FY22, from ~232.5 crore in 2020-21 — the company’s total tax expenses increased to ~454.9 crore in FY22, from ~71.6 crore in the year-ago period. This crimped net profit for the maker of the Carnival and the Seltos models by 25.6 per cent to ~825.4 crore in FY22, according to the financial statements reviewed by Business Standard.

In contrast to a 25.6 per cent fall in net profit (profit after tax), the company’s profit before tax rose by 23.1 per cent to ~1,280 crore in FY22.

Kia India did not respond to queries sent by Business Standard on its fall in net profit in FY22. The South Korean automotive major, which rolled out its first Seltos in the country in August 2019, sold 186,787 units domestically, up 20 per cent yearon-year (YOY), in FY22.