Seoul: Kia Corp., South Korea's second-largest automaker, reported a significant decline in its fourth-quarter net profit, attributing the fall to the impact of U.S. import tariffs. The net profit for the period ending in December decreased by 15.5 percent to 1.47 trillion won (approximately US$1 billion), down from 1.74 trillion won recorded in the same quarter of the previous year.

According to Yonhap News Agency, the results fell short of market expectations, with analysts predicting a net profit of 1.5 trillion won based on a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency. The tariff adjustments followed a trade agreement made last year where Washington agreed to reduce tariffs on South Korean auto imports from 25 percent to 15 percent, as Seoul committed to investing $350 billion in the U.S.

However, complications arose when U.S. President Donald Trump announced intentions to reinstate the 25 percent tariff on South Korean vehicles, citing delays on Seoul's part in implementing supportive legislative procedures. This announcement had further repercussions on Kia's financial performance.

In the fourth quarter, Kia's operating profit saw a steep decline of 32 percent, falling to 1.84 trillion won from 2.71 trillion won a year ago. Despite this, sales experienced a modest increase of 3.5 percent, reaching 28.08 trillion won compared to 27.14 trillion won in the previous year.

For the entire year of 2025, Kia's net profit dropped by 22.7 percent to 7.55 trillion won from 9.77 trillion won in 2024. Jung Sung-kuk, Kia's Senior Vice President, noted during an earnings conference call that U.S. tariffs accounted for approximately 2.9 trillion won in the annual net results, with expectations of this figure rising to 3.3 trillion won for the upcoming year.

The automaker's operating profit for 2025 declined by 28 percent to 9.08 trillion won from 12.67 trillion won, while sales increased by 6.2 percent to 114.14 trillion won, up from 107.49 trillion won the prior year. Looking forward to 2026, Kia aims to achieve an operating profit of 10.2 trillion won on sales of 122.3 trillion won and plans to sell 3.35 million vehicles worldwide, representing a 6.8 percent increase from the previous year.

Kia is strategically focusing on improving profitability and fostering growth by enhancing the average selling prices of its environment-friendly vehicles in the U.S. market, despite the challenges posed by U.S. tariffs and intensified competition in key markets. The company has allocated 5.6 trillion won for capital expenditure this year, a slight decrease from the 5.7 trillion won spent last year.