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ANNUAL REPORT
2013
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Table of contents

  • Page 1
    ANNUAL REPORT 2013 _

  • Page 2
    vibrant Like the vibrant beat of music Distinctive Through our distinctive design Reliable As a reliable and trustworthy partner A Different Beat We share a different beat of the future of mobility, driving towards a new era of growth around the world 03

  • Page 3
    ...Design Management 42 Branding 44 Marketing 46 2013 New Models OuR fuTuRe 52 Corporate Social Responsibility 54 Research & Development 60 Global R&D Network 62 Eco-friendly Models 63 Concept Cars 64 Financial Review 128 Product Line-up 130 Global Network 132 Board of Directors KIA...

  • Page 4
    ... 2009 BuSineSS highLighTS 2013 Global Retail Sales (Unit: Thousand units) 2012 2011 2010 2009 consolidated Statement of Financial position* (KRW in millions) Total Assets Cash Items (Liquidity) Current Assets Total Liabilities Short-term Debt Current Liabilities Long-term Debt Total Debt Net...

  • Page 5
    ... and a slow recovery in the global economy, Kia motors saw growth of 4% in both production and sales. Kia motors is becoming an ever more global company, with a steady rise in the percentage of production and sales coming from overseas. 2010 2009 392 2013 2012 2011 2010 2009 1,599 1,586 1,584...

  • Page 6
    ...KRW in billions) 2013 2012 2011 6.7 7.5 8.1 6.6 4.1 Operating Profit % of Revenue 3,177 3,522 3,499 2,370 1,195 PROFitABiLity in 2013, Kia motors' operating and net profits stood at KRW 3,177 billion and KRW 3,817 billion, respectively. These figures are slightly down on last year, but they also...

  • Page 7
    ... and Mozambique • Operated support programs for selected local communities • Volunteer work undertaken by staff groups 20162014-2015 • Add two bases every year, starting with Tanzania and ethiopia in 2014 • Increase participation in cSR activities by Kia staff around the world • conduct...

  • Page 8
    ... In 2013, Kia Motors achieved continued growth despite a challenging business environment at home and abroad. Our worldwide market presence has further increased, with total global sales of 2.83 million units, up about 4% over the previous year. The global economy has experienced fierce competition...

  • Page 9
    ... on to win numerous design accolades over the last five years. Meanwhile, our mobile apps for Sportage and Carens (Rondo) also were by the red dot awards in the Communication category, confirming the design competitiveness of both our products and our customer contact points. Kia appreciates that...

  • Page 10
    ...differentiated customer experiences 6. Strengthen global portfolio strategy 7. Enhance management system 8. Build basis for sustainable growth create differentiated competitiveness to achieve global sales of 3 million units KIA MOTORS AnnuAl RepORT 2013 18 19 GROup cORe VAlueS•cOMpAny VISIOn

  • Page 11
    ... 5-year Cost to Own Award Picanto (Morning) and Rio (Pride) won red dot Design Awards Construction began on third China plant with 300,000-unit annual capacity / Kia Motors selected as the 'Best Car Manufacturer' in the u.K. Kia Motors won the world's top three design awards - red dot Design...

  • Page 12
    OuR peRFORMAnce Driving AnnuAl RepORT 2013 22 23 OuR peRFORMAnce a vibrant Future KIA MOTORS

  • Page 13
    ... of the Kia brand in the global market. Sales revenue reached the highest level in company history at KRW 47,597.9 billion, while operating income was KRW 3,177.1 billion, meaning that profits have now exceeded KRW 3 trillion for three consecutive years. KIA MOTORS AnnuAl RepORT 2013 24 25...

  • Page 14
    ... feature a unique design, outstanding performance, and strong price competitiveness, and is therefore expected to be an important part of the electric car market. With these bright prospects for the year ahead, Kia has set a domestic sales target of 480,000 units for 2014, a year-on-year increase...

  • Page 15
    ... also was a positive sales trend in other markets such as Russia, Africa, and Middle East with 1.9% growth year-on-year. Global Market Share Overseas Retail Sales (Unit: Thousand units) (Unit: %) 2013 2012 2,289 2,228 3.4 2011 1,986 2013 KIA MOTORS AnnuAl RepORT 2013 28 29 OuR peRFORMAnce...

  • Page 16
    ... a 'value pricing' strategy and build the foundations to enable us to achieve our business plan targets. We will increase the sale of localized models, and launch new cars and new versions of current models as part of our on-going efforts to improve profitability. KIA MOTORS AnnuAl RepORT 2013 30...

  • Page 17
    ... 2013 ReD DOT DeSign AWARD, BeST Of The BeST Red dot, Germany, March 2013 DRiveR'S chOice AWARD fOR BeST SuBcOmPAcT cAR Motorweek, USA, February 2013 The hOTTeST neW cARS fOR 2014 Forbes Magazine, USA, July 2013 BeST LARge SALOOn Wheels Magazine, UAE, January 2013 KIA MOTORS AnnuAl RepORT 2013...

  • Page 18
    OuR STRenGTHS Design AnnuAl RepORT 2013 34 24 35 25 OuR STRenGTHS the Distinctive Future KIA MOTORS

  • Page 19
    ... of our cars. Kia's definition of design involves delivering unique value to customers while achieving innovative results through creative thinking, which is enabled by breaking away from conventions across all areas of management. USD million brand value KIA MOTORS AnnuAl RepORT 2013 36 37...

  • Page 20
    ... again that Kia's family look is being widely recognized for its excellence. In 2012, with the Rio (Pride) receiving an award at the IDEA Design Awards, Kia has now earned recognition from the world's top three design award competitions - a true 'grand slam'. KIA MOTORS AnnuAl RepORT 2013 38 39...

  • Page 21
    ... Mobile App 2012 red dot Design Awards Best of the Best (Communication) Sportage 2011 red dot Design Awards Winner (Product Design) nOvemBeR 2008 Kia Motors Korea Design Award, Korea's most prestigious design award Presidential Award (Corporate Sector) mARch 2012 DecemBeR 2010 picanto (Morning...

  • Page 22
    ...showrooms that features Kia's red corporate identity color and a clean, modern design to improve customer satisfaction. A new roadshow concept developed in 2013 that gives consumers a chance to experience our vehicles will be more widely executed starting in 2014. KIA MOTORS AnnuAl RepORT 2013 42...

  • Page 23
    ... the world through our official blog, Twitter, and Facebook page. When we release new models, we roll out applications that reflect that model's characteristics. We aim to be an industry leader in digital marketing by introducing unique and innovative contents. KIA MOTORS AnnuAl RepORT 2013 44...

  • Page 24
    ... technology. The 5000cc V8 Tau engine has been engineered especially for US consumers and produces 420 horsepower, while the V6 delivers 311 horsepower. With its elegant design and high specifications, the K900 will strengthen Kia's brand image in North America. KIA MOTORS AnnuAl RepORT 2013...

  • Page 25
    OuR FuTuRe A Better Way to go KIA MOTORS AnnuAl RepORT 2013 48 49 OuR FuTuRe

  • Page 26
    ... universal right to mobility'; and challenge, defined as 'providing opportunities to take on challenges' to make a better life. Based on these values, we are examining our present cSR initiatives and expanding their scope and scale to create a better future for humanity. KIA MOTORS AnnuAl RepORT...

  • Page 27
    cORPORATe SOciAL ReSPOnSiBiLiTy Kia Motors enhances life through cars, which have evolved to become a vital part of daily life, and is committed to the highest levels of social responsibility so that the global community can enjoy more balanced growth. Green light project Launched in Africa in 2012,...

  • Page 28
    ... Economy and the Korea Institute of Energy Technology Evaluation and Planning. In 2014, we plan to release the Soul EV in Korea as well as in Europe and North America, thus building the foundations of a real market for electric vehicles. KIA MOTORS AnnuAl RepORT 2013 54 55 OuR FuTuRe ReSeARcH...

  • Page 29
    ..., we use a 2.0 GDI gasoline-powered engine and a high voltage lithiumion polymer battery with an output of more than 50 kW. This long-distance PHEV will help to further establish Kia's credentials in the green car market. 2011. 04 Optima (K5) hybrid Ray ev FceV (Fuel cell elecTRIc VeHIcle) 2011...

  • Page 30
    ... models in Europe, as well as in the Picanto (Morning) and Sportage. In the Korean market, we first applied automatic transmission ISG and CVT ISG in the 2011 Forte, followed by the Picanto (Morning), Ray, Rio (Pride), Soul, all-new Forte/Cerato (K3), and Optima (K5). KIA MOTORS AnnuAl RepORT 2013...

  • Page 31
    ... in Europe. • Location: Frankfurt, Germany • Facility: Design Center AMeRIcA DeSIGn & TecHnIcAl cenTeR the America Design & technical Center undertakes research into concept cars and the development of massproduction cars suitable for the uS market. • Location: irvine, California...

  • Page 32
    ... is the 10th concept car to be created by the Kia Design Center Europe located in Frankfurt, Germany. This small crossover model targets the European market. It sports a refined exterior, a compact chassis, Kia Motors' unique tiger-nose grille, and wide headlamps. The 'butterfly' doors, which are...

  • Page 33
    ... Based on a report originally issued in Korean The Board of Directors and Stockholders Kia Motors Corporation: We have audited the accompanying consolidated statements of financial position of Kia Motors Corporation and its subsidiaries (the "Company") as of December 31, 2013 and 2012, and the...

  • Page 34
    ... current assets Total current assets Long-term financial instruments Long-term available-for-sale financial assets Long-term accounts and notes receivable - trade Investments in associates and joint ventures Property, plant and equipment, net Investment property, net Intangible assets, net Guarantee...

  • Page 35
    KIA MOTORS cORpORATIOn AnD SuBSIDIARIeS KIA MOTORS cORpORATIOn AnD SuBSIDIARIeS consolidated Statements of Income consolidated Statements of comprehensive Income (In millions of won, except earnings per share information) For the years ended December 31, 2013 and 2012 Note For the years ended ...

  • Page 36
    KIA MOTORS cORpORATIOn AnD SuBSIDIARIeS consolidated Statements of changes in equity For the years ended December 31, 2013 and 2012 Attributable to owners of Parent company Accumulated other Retained comprehensive earnings income (loss) (In millions of won) (In millions of won) Attributable to ...

  • Page 37
    ...Dividends received Income tax paid Net cash provided by operating activities Cash flows from investing activities Proceeds from sale of investments in associates Proceeds from sale of long-term available-for-sale financial assets Proceeds from sale of property, plant and equipment Proceeds from sale...

  • Page 38
    KIA MOTORS cORpORATIOn AnD SuBSIDIARIeS notes to the consolidated Financial Statements For the years ended December 31, 2013 and 2012 (c) Financial information of subsidiaries Financial information of significant subsidiaries (before eliminating intra-group transaction) as of and for the years ...

  • Page 39
    ... circumstances, appropriate adjustments are made to its financial statements in applying the equity method. When the Company's share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest, including any long-term investments, is reduced to nil and the...

  • Page 40
    ... are designated as available-for-sale or are not classified as financial assets at fair value through profit or loss, held-to-maturity investments or loans and receivables. Subsequent to initial recognition, they are measured at fair value, with changes in fair value, net of any tax effect, recorded...

  • Page 41
    KIA MOTORS cORpORATIOn AnD SuBSIDIARIeS notes to the consolidated Financial Statements For the years ended December 31, 2013 and 2012 (i) Impairment of financial assets A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there ...

  • Page 42
    ... flows using the interest rate of high-quality corporate bonds that have maturity dates approximating the terms of the Company's obligations and that are denominated in the same currency in which the benefits are expected to be paid. Any actuarial gains and losses are recognized in profit or loss in...

  • Page 43
    ... Revenue from sale of goods or the use by others of the Company assets is measured at the fair value of the consideration received or receivable, net of trade discounts, volume rebates and cash incentives to the customers. Revenue from sales of vehicles, service parts and other related products...

  • Page 44
    ...The Company is engaged in manufacturing and sales of vehicles and parts, leasing of vehicles and rendering vehicle maintenance services. Leasing income and maintenance services are insignificant to total sales. Revenue information for each product and service is not available and management believes...

  • Page 45
    ... historical cost for the year ended December 31, 2013. (*3) Investments in equity instruments that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured are measured at cost. KIA MOTORS AnnuAl RepORT 2013 88 89 FInAncIAl ReVIeW nOTeS TO THe...

  • Page 46
    ... Yueda Kia Motors Co., Ltd. Hyundai Motor Manufacturing Russia LLC Kia Japan Co., Ltd.(*3) Innocean Worldwide Americas, LLC Hyundai Information System North America Sewon America, Inc. Hyundai Capital Services UK Ltd. â,© 2013 2012 Hyundai Mobis Co., Ltd. Hyundai Steel Company Hyundai Engineering...

  • Page 47
    ...profit or loss on investment Other capital movement Dividends received Other decrease ending balance company Total assets Total liabilities Sales Operating income net income (loss) Other comprehensive income Hyundai Mobis Co., Ltd. Hyundai Steel Company Hyundai Engineering & Construction...

  • Page 48
    ... as of and for the year ended December 31, 2013 is summarized as follows: (In millions of won) company Total assets Total liabilities Sales Operating income net income (loss) Other comprehensive income Hyundai Mobis Co., Ltd. Hyundai Steel Company Hyundai Engineering & Construction Co.,Ltd...

  • Page 49
    ...and impairment loss carrying amount (*1) The net amount of loss on sale of property, plant and equipment is â,© 38,110 million for the year ended December 31, 2013. (*2) The Company cumulatively received â,© 218,065 million government grants as of December 31, 2013 through investment agreement with...

  • Page 50
    ... by CEO in five years. Cash flows expected to be generated after five years were estimated within the scope of not to exceed long term average growth rate of industry. No impairment loss is recognized as a result of the impairment tests in 2013 and 2012. (d) Details of research and development...

  • Page 51
    ... (*) The Company did not derecognize outstanding trade accounts and notes receivable transferred to the financial institutions and recognized the transaction as borrowings from financial institution. Less : current portion of long-term borrowing â,© 1,081,778 KIA MOTORS AnnuAl RepORT 2013 100...

  • Page 52
    ... 2012 2013 2012 Current service costs Interest costs, net â,© 251,570 791 201,105 11,221 212,326 Other current liabilities: Unearned income Dividends payable Guarantee received Finance lease liabilities - current Other â,© Other non-current liabilities: Leasehold deposits received Long-term...

  • Page 53
    ... 31, 2013, management cannot reliably estimate the potential impacts, if any, on the Company's financial position, financial performance and cashflows. (e) In connection with long-term debt guaranteed by Hyundai Motor America, Inc. and Mobis America, Inc., Kia Motors Manufacturing Georgia, Inc...

  • Page 54
    ..., 2013 and 2012 are summarized as follows: (In won, except for ratio) 2013 2012 Dividend per share Market price as of year end Dividend yield ratio â,© 700 56,100 1.25% 650 56,500 1.15% KIA MOTORS AnnuAl RepORT 2013 106 107 FInAncIAl ReVIeW nOTeS TO THe cOnSOlIDATeD FInAncIAl STATeMenTS

  • Page 55
    ... sale of property, plant and equipment Gain on sale of intangible assets Reversal of allowance for doubtful accounts Other income â,© 13,422 179,020 22,609 10,990 1,359 149,788 13,394 205,674 20,770 17,501 180 337 159,483 417,339 â,© 377,188 KIA MOTORS AnnuAl RepORT 2013 108 109 FInAncIAl...

  • Page 56
    ... rate for the years ended December 31, 2013 and 2012 are as follows: (In millions of won) 2013 2012 2013 2012 Foreign exchange transaction loss Foreign exchange translation loss Loss on disposal of accounts and notes receivable - trade Donation Loss on sale of property, plant and equipment Loss...

  • Page 57
    ... balance Profit or loss Other comprehensive income ending balance 2013 2012 Allowance for doubtful accounts Bad debts write-off Accrued expenses Provision of warranty for sale Provision of other long-term employee benefits Annual leaves Revaluated land Depreciation Investment in subsidiaries...

  • Page 58
    ... operations â,© 5,051,324 2,109,384 2013 2012 Profit for the year Adjustments for: Depreciation Amortization Other long term employee benefits Retirement and severance benefits Warranty expenses Loss on foreign currency translations Interest expense Loss on sale of property, plant and equipment...

  • Page 59
    ...2,175,513 (*) Other receivables are comprised of other accounts and notes receivables, long-term other accounts and notes receivables, accrued income, short-term loans and guarantee deposits. KIA MOTORS AnnuAl RepORT 2013 116 117 FInAncIAl ReVIeW nOTeS TO THe cOnSOlIDATeD FInAncIAl STATeMenTS

  • Page 60
    KIA MOTORS cORpORATIOn AnD SuBSIDIARIeS notes to the consolidated Financial Statements For the years ended December 31, 2013 and 2012 Changes in allowance for doubtful trade accounts and notes receivable and other receivables for the years ended December 31, 2013 and 2012 are summarized as follows...

  • Page 61
    ... notes receivable - trade Account and note receivable - other Long-term account and notes receivable - trade Other financial assets â,© Available-for-sale financial assets: Short-term available-for-sale financial assets Long-term available-for-sale financial assets â,© Held-to-maturity investments...

  • Page 62
    ... Services Inc. Other Hyundai Motor America related companies Hyundai Motor Manufacturing Czech s.r.o. Hyundai Motor Manufacturing Alabama, LLC Hyundai Auto Canada Corp. Other â,© 5,026,030 KIA MOTORS AnnuAl RepORT 2013 122 123 FInAncIAl ReVIeW nOTeS TO THe cOnSOlIDATeD FInAncIAl STATeMenTS

  • Page 63
    ...Kia Motors Co., Ltd. Hyundai Motor Manufacturing Russia LLC Mobis Alabama, LLC Mobis Parts America, LLC Mobis Slovakia s.r.o. Powertech America, Inc. Sewon America, Inc. Other Hyundai Glovis Co., Ltd. Hyundai WIA Corporation Hyundai Capital Services Inc. Other Hyundai Motor America related companies...

  • Page 64
    ... Kia Motors Co., Ltd. Hyundai Motor Manufacturing Russia LLC Mobis Alabama, LLC Mobis Parts America, LLC Mobis Slovakia s.r.o. Powertech America, Inc. Sewon America, Inc. Other Hyundai Glovis Co., Ltd. Hyundai WIA Corporation Hyundai Capital Services Inc. Other Hyundai Motor America related Hyundai...

  • Page 65
    ...the first Kia Motors product that utilizes the company's newly-developed large-sedan platform. The Cadenza is best known for its luxurious styling, in which 'light' and 'lines' boldly stand out, while its top-end power performance provides an exhilarating driving experience. The current model sports...

  • Page 66
    ...Kia Motors Co, Ltd (DYK) • Middle east & 7 8 20 21 22 29 Overseas Design centers 36 37 Africa china 9 10 23 24 china 30 Kia Design Center America Kia Design Center Europe No. 1 Plant • No. 2 Plant • No. 3 Plant KIA MOTORS AnnuAl RepORT 2013 130 131 FInAncIAl ReVIeW GlOBAl...

  • Page 67
    ...(Former) Executive Director of Market Oversight at the Fair Trade Commission Doo-hee Lee • Currently, Dean of Business School at Korea University • (Former) President of APAIE (Asia-Pacific Association for International Education) CONTACT INFORMATION For more information on Kia Motors, please...

  • Page 68
    Kia Motors Corporation 12 Heolleung-ro, Seocho-gu, Seoul, 137-938, Korea