Kia 2006 Annual Report Download - page 6

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KIA MOTORS 2006 Annual Report
President’s Message
Dear stockholders,
I would like to take this opportunity to express my
appreciation for your strong support during the last year.
In 2006, Kia Motors focused all our efforts on breaking
through the crisis, adopting a retrenchment policy against the
worst business environment. Blocked by some unexpected
barriers, nevertheless, we didn’t solve all the problems which
we should definitely get through with to grow and develop
constantly, having some of them left for 2007.
Last year we were hurt by dramatically dropping export
margin from strong Korean won and a faltering recovery in
the domestic market which would otherwise have been a
firm ground to get out of the crisis. All this, eventually, has
brought an unbalanced ratio between interior structure
and exterior volume to us.
As for our performance in 2006, total sales amounted to
1,140,734 units - up 3.2% from the previous year. Sales
revenue totaled 17 trillion 439.9 billion won - up by 9%,
hitting an alltime-high. However, our operating profit fell
back to minus 125.3 billion won, and ordinary profit and
year's net profit turned out lower than the previous year:
73.2 billion and 39.3 billion won, respectively. Spikes in the
strong KRW, fierce competition, and the shrunken
domestic RV market all hurt us.
On behalf of our board members, I wish to take this
opportunity to deliver words of apology for not having
met your profitability expectations.
Thanking to your support, however, we have built a solid
foundation that will allow us to stand taller in the future
global car market. Working on all of our key businesses on
plan, we have made another new base of a successful
global maker in global management, quality, branding,
design, and services.
The year 2006 will be the milestone in Kia’s history. We
have started building a plant with an annual capacity of
300,000 units in US, the world’s most dynamic automobile
market. Plant operations in Slovakia have just started mass
production, giving us a base for aggressive marketing in
Europe. Construction is underway on Kia’s second plant in
China: we will soon have a consolidating basis to make
global management decisions that maximize our presence
in the world's major markets.
We’ve set our 'Design Management Policy' into motion last
year: this consists of developing unique and attractive
designs that reflect Kia's exciting and enabling identity.
More than ever, through consistent quality management,
we are winning the trust and hearts of consumers for our
quality, reliability, affordability and safety. We are on the
edge of occupying the upper rankings in world's most
prestigious quality approval systems. Kia entered into
middle level in J.D. Power's Initial Quality Study, and Rio
was also honored as the highest-ranking model in the
sub-compact segment.
New Carnival (Sedona) was selected as the most
impressive new vehicle by the quality reliability
assessment of America's prestigious "Consumer Report”. As
many as 4 models including our New Sorento earned five
star crash safety rating from the U.S. Department of
Transportation's National Highway Traffic Safety
Administration (NHTSA).
Some other notable achievements in 2006 include: (1) the
launch of ‘Q Service’, offering differentiated membership
benefits for the first time in Korea's auto industry (2) the
considerable buzz we created with our New Carens
(Rondo), Korea's first compact crossover utility vehicle and