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048
KIA MOTORS 2006 Annual Report
•R&D Trend (% of Revenue)
Credit Ratings
There was no change related to credit ratings in 2006. Overseas credit rating maintained a double investment grade (S&P: BBB-, Moody’s: Baa3), and both short-term
and long-term domestic credit ratings remained at the top level (short-term credit rating: A1, long-term credit rating: AA-).
•Credit Ratings Trend
Profitability
Kia had a 0.7% operating loss in 2006. The main causes of this operating were: KRW appreciation, slack domestic demand, and rising marketing expenses
domestically & overseas.
While 90% of the company’s production comes out of Korea, exports represent 76% of total sales. This leaves us exposed to fluctuations in foreign exchange rates.
Revenue losses caused by KRW appreciation eat into operating profits. The Korean Won appreciated 6.7% against the USD in 2006, resulting in an forex fall-out of
around minus ￦800 billion.
Management’s Discussion & Analysis
5.9%
6.9%
4.6%
2004 2005 2006 2004
122
1,554
2005
534
1,911
949
428
2006
635
1,756
799
322
1,055
377
OverseasR&DPP&E
A1+
A1
A1-
A2+
A2
A2-
A3+
A3
A3-
B+
B
B-
C
D
2003. 1.10 2003. 6. 5 2004. 6.25 2004. 9. 7 2006. 6.22 2006.10.19 2004. 6.25 2004. 9. 7 2005. 6.14 2006. 6.22 2006.10.19 2007. 1.17
A2+ A2+
[Domestic]
A1A1 A1 A1
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB
CCC
CC
C
Korea Investors Service
Short-Term
Korea Investors Service
Long-Term
A+ AA- AA- AA- AA- AA-
•CapEx Trend (KRW in billions)
Aaa
Aa
A1
A2
A3
Baa1
Baa2
Baa3
Ba1
Ba2
Ba3
B
Caa
Ca
C
2001. 6. 1 2002. 7. 4 2003. 5.23 2004. 11.26
[Overseas]
AA
A
BBB+
BBB
BBB-
BB+
BB
BB-
B+
B
B-
CCC
CC
C
D
2001. 6. 8 2002. 6.17 2003. 7.22 2005. 11.2
Moody's
Long-Term
Standard & Poor's
Long-Term
BB-
BBB-
BB BB+
Baa3
Ba3 Ba3 Ba2