Kia Motors Corporation Investor Presentation

Transcription

1 Kia Motors Corporation Investor Presentation February 2018

2 Table of Contents Business Plan 3 2. Strategy for Sustainable Growth Financial & Fundamentals 19 Appendix : 2017 Business Results 29 2

3 Business Plan

4 Sales Plan : Wholesale & Retail (in thousands) (P) Change(%) (in thousands) (P) Change(%) Wholesale 2,743 2, Retail 2,760 2, Korea Korea US US *Europe *Europe China China ROW ROW * Europe : EU + EFTA 4

5 Ex-factory Sales Plan (in thousands) (P) Change(%) Ex-factory Sales 2,708 2, Korea Plant Domestic Export 1,502 1, Overseas Plant 1,206 1, US China Europe Mexico

6 1 Korea Market Sales & Demand Growth 2018 New Models (Thousand Units) Kia % 2017 : -2.7% % 2018(E) : +0.3% % Model K3 Niro EV Industry 2017 : -1.8% 2018(E) : -1.0% 1,825 1,793 1,775 Segment Launch Dimension (L/W/H/WB) C-seg PC Feb Q ,640 / 1,800 / 1,440 / 2,700 B-seg SUV 4,388 / 1,805 / 1,560 / 2, (E) M/S Sales Plan Domestic Export 40K units / year 210K units / year 4.5K units / year 16.6 units / year Note : M/S is based on demand including imported cars Industry 2017 Trend Full-year demand: 1,793K units (-1.8% yoy) - Sales declined for two consecutive years due to high base effect ( excise tax-cut program lasted until Jun 2016) - Strong sales witnessed from several newly launched B-segment SUVs Kia Sales 2017 Review Robust SUV/minivan sales resulted in mix improvement (RV +2.3%p) Expanding RV sales on the back of newly launched Stonic, Sorento F/L, and continuously strong sales from Mohave M/S loss due to lower PC sales and lack of new models in Outlook Full-year demand(e): 1,775K units (-1.0% yoy) - (Pos.) Continuous recovery of overall economic conditions - (Neg.) Lack of new models & another interest rate hike likely Intensified Euro 6 will lead higher diesel-vehicle price 2018 Strategy Successful launch of K3 with improved fuel-efficiency & K9 Focus on fuel-efficiency marketing with new powertrain adoption Enhance EV line-up by introducing Niro EV 6

7 1 US Market Sales & Demand Growth 2017 Top Green Car Sales (Thousand Units) Kia 2017 : -8.9% 2018(E) : +3.4% % 3.7% 3.6% 88,019 58,474 50,559 Ranked 4 th out of 44 models Industry 2017 : -1.8% 17,550 17,230 27,237 20, (E) : -1.7% 16, (E) M/S Prius Fusion RAV4 Niro Camry Source : Hybridcars.com, including premium brands Industry 2017 Trend Full-year demand: 17.2M units (-1.8% yoy) - Slower growth from SUVs combined with negative PC sales growth - Higher interest rate and lower used-cars prices weakened overall demand Kia Sales 2017 Review Suffered mainly due to lack of new models (launched only Niro HEV) RV sales mix improved from 37.1% in 16 to 37.9% in 17 Reduced fleet sales by -12% to control profitability 2018 Outlook Full-year demand(e): 16.9M units (-1.7% yoy) - (Pos.) Number of newly launched SUV/Pick-ups increasing Continuing solid GDP growth and personal expenditures - (Neg.) Demand to fall as US market reaches pre-financial crisis level Auto financing market to contract with recent rate hike 2018 Outlook Reduce shipment from US/Mexico & Korea to lower inventory Plan to lower inventory from current 4.5 MOS to 3.5 MOS by 1H Expect new model launches of Stinger, Forte, K900 & Niro EV 7

8 1 Europe Market Sales & Demand Growth Sales Trend in Key Markets (Thousand Units) (Thousand Units) Kia % +4.4% 2017 : +8.4% 2018(E) : +3.4% % 3.1% +8.0% +11.8% +7.0% +13.7% Industry 15, : +3.3% 15, (E) : +1.8% 15, (E) M/S UK Germany Spain Italy France Industry Kia Sales 2017 Trend Full-year demand 15.6M units (+3.3% yoy) - Better-than-expected demand growth amid economy recovery - Slower demand in 2H due to political & economic slowdown (UK) - Lower diesel demand ( 16: 49.9% 17: 48.8% 18(E): 47.7%) 2018 Outlook Full-year demand(e) 15.9M units (+1.8% yoy) - (Pos.) Better consumption expected with lower unemployment rate Diverse models expected to be introduced in B/C segment SUV - (Neg.) UK/Germany auto demand reaching pre-crisis level Possible interest rate hike may cause auto financing burden 2017 Review Strong sales led by newly launched small-sized PC (Picanto, Rio, Niro) RV sales % up thanks to new model effect of Niro and Stonic (Sep) New model effect of B-seg SUV Stonic contributed to M/S expansion 2018 Strategy Successful launch of new models, cee d, cee d wagon etc. Strengthen green car line-up with Niro EV (2H) and deal with Euro 6 Expect to see continuing robust sales momentum from Stonic & B-SUV 8

9 1 China Market Sales & Demand Growth SUV Sales Units & % of Total Sales (Thousand Units) (Thousand Units) Kia 17 : -39.9% 18(E) : +14.0% % 2.0% 2.8% SUV % of Sales QE sales starts in 3Q NP sales starts in 2Q 40% 30% Industry 17 : +2.2% 18(E) : -1.3% 23,265 23,782 23, % 10% (E) M/S 0 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18E 2Q'18E 3Q'18E 4Q18E 0% Industry 2017 Trend Full-year demand 23.8M units (+2.2% yoy) - Weaker growth due to less tax cut benefit (5% cut in % in 17) - Continuing negative growth in PC while growth slowdown seen in SUV Kia Sales 2017 Review Political tension and weakened consumer sentiment led to poor sales Closed down weak dealers and those with conflicts in 1Q Aged KX3 & weak sales of KX5 lowered RV mix (31.1% in % in 17) 2018 Outlook Full-year demand 23.5M units (-1.3% yoy) - (Pos.) Demand growth expected from improved personal consumptions Motorization continues to take place in western inland cities - (Neg.) End of government s purchase tax-cut benefit Continuing lower demand growth in SUV segment 2018 Strategy Strengthen SUV lineup with strategic models (NP in 2Q & QE in 3Q) Enhance dealer competitiveness & increase penetration in Tier 3~6 cities Tightly manage inventory & incentive level to control profitability 9

10 1 Rest of World Market Key Region (Thousand Units) YoY(%) 2018(P) YoY(%) % Latin America % % 29.9% Middle East & Africa % % 23.6% Russia % % 22.1% Asia Pacific % % 10.9% Canada % % 9.6% Eastern Europe & Turkey % % 4.0% Total % % 100% Industry 2017 Trend Russia : Strong recovery due to improved consumer sentiment LATAM : Stabilized FX environment resulted in demand recovery MENA : Weak demand due to sluggish economy & consumption 2018 Outlook Russia : Consumer confidence to improve with economy turnaround and further support from the gov t (+16.7%) LATAM : Positive expectation from improving domestic demand (+1.4%) MENA : Allowed women driving in Saudi Arabia and expect to see recovery of auto demand in Iran & Pakistan (+4.0%) Kia Sales 2017 Review Russia : M/S improved due to robust sales of Rio (10.6% in 17) LATAM : M/S improved in Mexico to 5.7% with newly added plant MENA : Weaker-than-expected recovery mainly due to low oil price, unfavorable FX, and political instability 2018 Strategy Russia : Introduce wide rage of financing programs & new models LATAM : Continue to increase M/S in key countries with K3 new model MENA : Demand recovery likely thanks to rebound in oil prices 10

11 2. Strategy for Sustainable Growth

12 2 Strategy for Sustainable Growth Volume Growth New Opportunity with India Competitive Products Introduction of New Models K3 with New Powertrain Future Technology Vision for Future Mobility Eco-Friendly Initiatives ADAS Roadmap 12

13 2 Further Volume Growth Secured with India Capacity Location of New Plant India Auto Market Auto Demand (in Thousand units, 5yr CAGR) 4,930 Vehicles Per 1,000 Persons (2015) India 32 China 115 Korea 415 US 847 3, (F) Source: IHS Global Insight, KAMA Kia Motors India (KMI) Design Capacity 300,000 units Anantapur 390km Andhra Pradesh Chennai HMI Plant Capacity : 650K units Production Commence 2H 2019 Location Anantapur CAPEX (E) USD1.1 billion Models Compact SUV, Compact Sedan 13

14 2 Continuous Introduction of Competitive New Models Key New Model Launches by Region Future Product Pipeline (Concept Car) Telluride Luxury Premium Full-size SUV Domestic (Korea) New Model : 5 Morning, Stinger Stonic, Pride Niro PHEV New Model : 3 New Model : 4 K3, Soul Premium Large Sedan Niro EV New Model : 4 Premium full-size SUV with 3-row, 7-passenger, targeted for NA market Based on an existing platform and will contribute to Kia s SUV line-up *Introduced at North American International Auto Show (NAIAS) in Jan 2016 US Rio Stinger Niro PHEV Forte, Soul Premium Large Sedan Niro EV Global SUV Line-up Enhancement Plan 12 Models Europe China New Model : 5 Morning Stinger, Stonic K5w PHEV, Niro PHEV New Model : 4 KX7 (Mid-sized SUV) Pegas, Forte K5 PHEV New Model : 5 cee d, cee d Wagon cee d GT Niro EV, Soul EV New Model : 5 C-segment SUV A-segment SUV K3, KX3 EV, K5 PHEV 7 +2 Niro KX3 Sportage Sorento Mohave Carens Carnival ~ Current China Europe US 14

15 2 K3 with New Powertrain Utilizing Kia s 1 st IVT (Intelligent Variable Transmission) All New K3 Introduced in February (Korea) Global Top Fuel-Efficiency in Segment First in-house designed and built Intelligent Variable Transmission (IVT) introduces new line of Smart Stream technologies to help increase fuel efficiency and deliver an estimated 15.2km/L for Gasoline model. Advanced Safety with ADAS Technology Smart Stream G1.6L Engine Fuel-Efficiency Comparison <Gasoline> Smart Stream IVT Forward Collision Warning System Blind Spot Detection 13.7km/L 15.2km/L No Model Efficiency 2 HMC Avante HMC i GM Cruise 11.3 Smart Parking Assist System Lane Departure Warning System Previous K3 All New K3 15

16 2 Vision for Future Mobility Autonomous Kia plans to commercialize Level 4 autonomous driving technology, with Smart City autonomous vehicle testing due to commence in 2021 Eco / Electric Kia will introduce 16 models by 2025, including a range of HEV, PHEV, EV, as well as an all-new fuel-cell electric vehicle in 2020 Connected Kia will adopt connected car technologies by 2025 across every vehicle segment, and aim to make every single model a connected car by 2030 Mobility Kia launched WiBLE car-sharing service in Korea in 2017 and plans to roll-out this service to certain European markets from late 2018 Focused on Consumers Fundamental Mobility Needs : Accessibility, Convenience, and Efficiency 16

17 Toyota Hyundai-Kia Honda Ford Renault-Nissan Tesla BMW VW GM Daimler 70,000 60,000 50,000 40,000 30,000 20,000 10,000-2 Eco-Friendly Initiatives Green Car Roadmap Historical Sales Trend Total of 6 Models in ,852 FCEV HEV 3 PHEV 2 EV 1 Retail Sales in Units % of Total Global Sales 50, % 7,751 23,172 25,039 26,378 27, % 0.9% 0.9% 1.0% 1.7% Niro 76% 0.3% Green Car Line-up by 2025 : 16 Models in Total FCEV 1 HEV 5 PHEV 5 EV 5 Global No.2 in Green Car Sales in 1H (Thousand units) Hyundai Motor Group to have 38 different models by 2025 Currently, Global No. 2 in Green Car Sales Target to be Global Top 3 in EV Market Kia s Niro EV (Jul 18) : will offer driving range of 380km Kia will introduce its own Fuel Cell EV in 2020 Source : IHS Global Insight 17

18 2 Autonomous Driving & Intelligent Safety Initiatives ADAS Roadmap ~ ADAS Enhancement Mass Fleet Operation Level 4 Smart City Autonomous Pilot Hyper-Connected Mobility Service Level 1 Function-Specific Automation Lane Departure Warning System Blind Spot Detection Smart Parking Assist System Autonomous Emergency Brake Most of Kia vehicles offer Level 1 technology Level 2 Combined Function Automation High-performance sedan Stinger and refreshed K5 offers Level 2 technology Highway Driving Assist Traffic Jam Assist Level 3 Limited Self-Driving Automation Gradually Moving on to Partially Automated Driving in 2019 Highway Autonomous Driving Remote Parking Assist System Source : NHTSA Definition, Company 18

19 3. Financial & Fundamentals

20 3 Profitability & Capital Expenditure Trend Revenue Operating Profit (KRW trn) 1,127 1,095 1,054 1,131 1,161 (KRW/USD FX Rate) 1,131 (KRW trn) 7.5% 6.7% 5.5% 4.8% 4.7% (% Margin) % EBITDA (KRW trn) (% Margin) 9.7% 9.2% 8.3% 7.6% 7.9% 4.7% EBITDA vs. CapEx (KRW trn) EBITDA CapEx Note: CapEx = Acquisition of property, plant and equipment + Acquisition of intangible assets 20

21 3 Liquidity & Debt Position Trend Total Debt vs. Net Cash Total Liquidity (1) (KRW trn) (KRW trn) Total Debt Net Cash Cash & Cash Equivalent Debt Composition Debt Maturity Profile (3) (2017 year-end) (KRW bn, 2017 year-end) Bond 35% LT Debt 21% LT Debt (56%) 2,512 ST Debt (10%) Current Portion of LT Debt 10% ST Borrowing (2) 34% Total: KRW8.7trn (KRW 5.7trn excluding trade finance) 1, , Note: 1. Liquidity includes ST Financial Instruments & ST Available for Sales Financial Assets 2. ST Borrowing : 100% trade finance 3. Excludes trade finance ~ 21

22 3 Prudent Investment Spending Historical Trend (KRW bn) R&D/Maintenance Breakdown (KRW bn) 3,878 3,707 3, Domestic 1,159 1,431 1,552 1,975 1,993 2,122 2,973 1,318 1,085 1,009 2,649 2,615 Overseas ,133 1, R&D 1,517 1,597 1,802 2,560 2,622 2,603 Domestic ,560 2,622 2,603 1,517 1,597 1,802 Overseas Expansionary & Maintenance 1,133 1, ,318 1,085 1, R&D Expansionary & Maintenance Total 2,650 2,972 2,615 3,878 3,707 3,612 Note: Numbers indicate total investment spending 22

23 3 Historical Dividend Trend 2, % 35.0% 1,800 1,600 Dividend Per Share (KRW) Payout Ratio 30.0% 1, % 25.0% 1,200 1, % 17.0% 16.0% (excluding ordinary wage related expense) 20.0% % 6.8% 6.9% 7.4% 6.7% 1,000 1,100 1, % 10.0% 5.0% 0.0% Dividend Yield % 1.0% 0.9% 1.1% 1.3% 1.9% 2.1% 2.8% 2.4% 23

24 3 Strategically Located Production Sites Kia Motors Slovakia (KMS) Capacity: 330,000 (Sportage, cee d, Venga) Kia Motors Manufacturing Georgia (KMMG) Capacity: 340,000 (K5, Sorento, SantaFe*) W.Europe MENA Russia LatAm Others Korea Domestic Plants Capacity: 1,591,000 (Pride, K5, Sportage, etc.) Domestic Export US W.Europe LatAm Others US LatAm Others Kia Motors India (KMI) Capacity: 300,000 (Production to commence H) DYK Automobile Manufacturing Plant Capacity: 890,000 No.1 Plant Capacity: 140,000 No.2 Plant Capacity: 300,000 No.3 Plant Capacity: 450,000 China 100% Note: Capacity is based on official designed capacity. * Hyundai Models Kia Motors Mexico (KMM) Capacity: 400,000 (Pride/Rio, K3, Accent*) US Mexico LatAm 24

25 3 ASP Improvement via RV Sales Increase RV Sales Growth in Tandem with Global Trend Significant RV Sales Increase in Every Market Industry Trend 25% 27% 29% % 28% 28% 32% % 35% 36% 1,098 1,010 37% 36% 46.0% 43.7% 40.0% 30.7% 37.9% 37.1% 33.0% 27.6% 44.4% 42.4% 37.2% 36.4% 23.7% 31.1% 26.1% 21.2% Kia's RV Sales (in Thousand units) % of Total Sales Note: 1. RV = SUV + MPV + CUV Korea US Europe China Continuous Improvement of Average Selling Price Domestic ASP (mn KRW) Export ASP (Thousand USD)

26 3 Significant Improvement in Quality No.1 in Initial Quality Study for Two Consecutive Years Continuous Improvement in Vehicle Dependability Study Industry Average CAGR +5.7% 106 Ranked No.1 for Initial Quality by J.D. Power Ranks highest in overall initial quality for two consecutive years Forte, Soul, Cadenza & Niro recognized as best-in-segment Industry Average CAGR +6.4% Note: 1. Initial Quality Study (IQS): examines issues experienced within the first 90 days of new-vehicle ownership 2. Vehicle Dependability Study (VDS): examines issues reported by original owners of 3-year-old vehicles by analyzing problems experienced over the past 12 months of ownership 26

27 3 Stellar Improvement in Design & Brand Triple Triumph for Kia at 'if Design Awards 2017' Increased Recognition in Brand Value (USD bn) Year Model Category 2010 Venga Product Design 2011 Sportage / Optima Product Design 2012 Picanto Product & Communication Design 2013 Pro-cee d / Optima Product & Communication Design 4.1 Rank Rank Rank Rank Rank Rank Soul Product Design 2015 Sorento Product Design 2016 Sportage / Optima Product Design 2017 Optima Wagon / Niro / Rio Product Design 8 th Consecutive Year if Design Award since if Design Awards won by Kia s latest models (Optima Sportswagon, Niro and new Rio) Total number of if Design Awarded models to date: Top 11 Automotive Brand (2017) Brand Brand Value Overall Ranking Auto Ranking Toyota M-Benz BMW Honda Ford Hyundai Audi Nissan Porsche Land Rover Source : Interbrand MINI

28 3 Enhanced Customer Recognition Auto Brands Reliability (US, 2016) Customer Recognition (US, 2016) Rank Brand Reliability Score Rank in 2015 Rank Brand Overall Score Road-Test Score Consumer Rating 1 Lexus 86 (1) 2 Toyota 78 (2) 3 Buick 75 (6) 4 Audi 71 (3) 5 Kia 69 (6) 6 Mazda 68 (4) 7 Hyundai 66 (9) 8 Infiniti 62 (24) 9 BMW 57 (11) 10 Honda 57 (8) 1 Audi % 2 Subaru % 3 Lexus % 4 Porsche % 5 BMW % 6 Mazda % 7 Buick % 8 Toyota % 9 Kia % 10 Honda % 11 Hyundai % Source : Consumer Report Annual Auto Reliability Survey \ Scored 69 out of 100 Ranked 5 th out of 29 auto brands Kia s Optima crowned as Most Reliable Mid-sized Car 2016 Best Mid-sized SUV : Kia Sorento Scored 84 out of 100 Highest score out of 19 models Source : Consumer Report 28

29 Appendix : 2017 Business Results 29

30 Income Statement (in Billion Won) 2016 % 2017 % Change (%) Sales Revenue 52, , Cost of Sales 42, , Gross Profit 10, , SG&A 7, , Operating Profit 2, (excluding ordinary wage related expense) (1,535) (2.9) (-37.7) Pre-tax Profit 3, , Net Profit 2, * Average USD/KRW Rate : 2016 KRW 1, KRW 1,131 (-W30 ) 30

31 Quarterly Income Statement (in Billion Won) (in Billion Won) Q 2Q Q 4Q 1Q 2Q Q 4Q 4Q 17 vs. 4Q 16 Sales Revenue 12,649 14,450 12,699 12,915 12,844 13,578 14,108 13, Cost of Sales 10,076 11,522 10,324 10,360 10,375 11,221 12,317 10, (%) (79.7) (79.7) (81.3) (80.2) (80.8) (82.6) (87.3) (82.3) Gross Profit 2,573 2,929 2,375 2,555 2,468 2,357 1,791 2, margin(%) (20.3) (20.3) (18.7) (19.8) (19.2) (17.4) (12.7) (17.7) Operating Profit margin(%) (5.0) (5.3) (4.1) (4.1) (3.0) (3.0) (-3.0) (2.3) Pre-tax Profit 1,047 1, margin(%) (8.3) (7.3) (6.9) (3.5) (6.0) (3.8) (-3.2) (2.3) Net Profit margin(%) (7.5) (5.7) (5.2) (2.5) (6.0) (2.9) (-2.1) (0.8) 31

32 Balance Sheet (in Billion Won) 2016-end 2017-end Change (%) Asset Current Asset *Cash 50,889 52,294 +1,405 20,912 21, ,593 9,619 +1,026 Liability 24,310 25,433 +1,123 **Debt Net Debt Current Ratio 8,069 8, (524) (869) (345) 128.7% 141.2% +12.5%p Equity Debt-to-Equity Ratio 26,579 26, % 32.6% +2.2%p * Cash = Cash & Cash Equivalents + ST Financial Instrument + ST Available for Sales Financial Asset ** Debt = Interest-bearing debt 32

33 Cash Flow Highlights (in Billion Won) 1,171 2,292 +3,995 cash increase 968 1, ,764-5,497 cash decrease 3,064 1,562 *Beginning Cash Net Profit D&A Debt Tangible/Intangible Assets Dividend ST Financial Instrument/Others * Ending Cash *Cash balance excludes ST financial instruments & ST Available for Sales Financial Asset including ST financial instruments Total Liquidity 8,593 bn +1,026 bn including ST financial instruments Total Liquidity 9,619 bn 33

34 Revenue Analysis Sales Revenue by Region Contributing Factors (in Billion Won) +1.6% ASP Domestic(KRW) : 23.2mn 23.7mn (+2.2%) Export(USD) : 14.0K 15.4K (+10.1%) 52,713 53, % 23.4% F/X USD / KRW : 1,161w 1,131w (-2.6%) EUR / KRW : 1,283w 1,276w (-0.5%) RUB / KRW : 17.4w 19.4w (+11.3%) 36.2% 33.3% Sales by Segment 21.2% 21.2% Domestic North America 4.1% 4.5% 18.8% 22.0% Europe ROW 37.1% 46.7% 38.4% 45.7% % 11.4% * Korea: KMC domestic revenue * North America: KMA/KCI wholesale revenue(kmm volume included) + KMMG OEM revenue * Europe: Europe sales subsidiaries wholesale revenue + KMS export revenue * ROW: KMC direct export revenue + Russia/KMAU/KMNZ/KMM wholesale revenue A+B+C D+E RV CV * Global retail sales (excluding China) 34

35 Cost of Sales / SG&A Expense Cost of Sales SG&A (% of revenue) (% of revenue) +0.3%p 80.2% +3.1%p 83.3% 15.1% 15.4% 2.1% 2.2% 4.6% 4.4% 1.4% 1.6% 3.1% 3.5% 3.8% 3.7% Salary & Wage Marketing Expense Export Expense Warranty Expense Others

36 Non-Operating Items Equity Earnings Financial & Other Income / Expense (in Billion Won) (in Billion Won) 1, Non-OP Income 981 bn -503 bn 2017 Non-OP Income 478 bn 36

37 2017 Global Retail Sales Results +2.2% 23,265 23, % 17,550 17,230 (in thousands) -39.9% % % 15,132 15, % *Europe 17.1% China 14.3% -1.8% 1,825 1, % Korea 18.8% +2.4% 93,038 95, % US 21.4% +2.5% 69,773 71, % 3,018 2,760 2,361 2,365 Global Global (ex-china) 2016 Industry 2017 Industry 2016 Kia Sales 2017 Kia Sales Sales % by Region * Europe : EU + EFTA 37

38 Full Model Line-up Mohave cee d K9 Sorento/KX7 Carnival/Sedona Stinger Sportage Venga K3 Cadenza/K7 New Carens/Rondo Niro Pride/Rio/K2 K5/Optima Ray Stonic Granbird Soul Morning/Picanto K4 KX3 Bongo A B C D E SUV CUV MPV CV 38

39 Thank you. 39