Aug. 12 (Bloomberg) -- Kia Motors Corp., South Korea’s second-biggest carmaker, more than quadrupled quarterly profit to the highest since 2003 as domestic and Chinese sales allowed it to avoid the worst of a global auto market meltdown.

Net income jumped to 347.1 billion won ($278 million) in the three months ended June from 86 billion won a year earlier, the company said in an e-mailed statement today. That beat the 157 billion won median of 23 analyst estimates compiled by Bloomberg. Sales rose 11 percent to 4.68 trillion won.

Chairman Chung Mong Koo boosted global vehicle sales 11 percent on demand for new models, including fuel-efficient Forte and Soul small cars, as well as rising sales in China and South Korea. Affiliate Hyundai Motor Co. also posted record earnings in the period, even as slumping U.S. demand pushed General Motors Corp. and Chrysler LLC into bankruptcy.

“Hyundai and Kia are differentiating themselves from the bigger players,” said Kwak Tai Ho, who helps manage $250 million worth of equity assets at Kyobo AXA Investment Managers Co. in Seoul as an analyst. “A weaker local currency helped them, but it’s more than just that.”

Seoul-based Kia fell 2.4 percent to close at 16,150 won in the city trading, compared with the benchmark Kospi index’s 0.9 percent drop. The stock has more than doubled this year, making it the second-best performer among 50 biggest stocks on the Korea Exchange.

Rising Sales

The automaker delivered 428,615 vehicles in the second quarter. Sales in China jumped 52 percent while domestic sales climbed 13 percent. In both countries, government stimulus measures spurred demand for fuel-efficient vehicles.

“Governments tax incentives and the weaker won helped us post a profit despite the unstable circumstances in the global auto industry,” Kia said in the statement.

First-half global retail sales rose 4.4 percent from a year earlier to 748,000 vehicles. Kia said it expanded its market share in the U.S. and Europe as industrywide sales fell. Its global market share rose to 2.5 percent from 2.1 percent a year earlier. The company said it aims to maintain a market share of about 3 percent in the U.S.

The automaker is targeting factory sales of 1.5 million vehicles worldwide this year and retail sales of 1.6 million, Chief Financial Officer Lee Jae Rok told reporters and investors today in Seoul. President Chung Eui Sun in May said the carmaker aims to sell 1.4 million units this year, in line with 2008.

Lifting Annual Goal

The won averaged 1,287.63 against the dollar in the second- quarter, depreciating 21 percent from a year earlier, according to Bloomberg data. The weaker won increased the repatriated value of Kia’s exports, which accounted for 70 percent of revenue last year.

Hyundai, South Korea’s biggest automaker, boosted net income 48 percent, beating analysts estimates, helped by higher sales in China and at home.

Kia’s operating profit, or sales minus the cost of goods sold and administrative expenses, more than doubled to 330.3 billion won from 117 billion won a year earlier, the statement said.

“The earnings improvement at Kia should continue,” said Suh Sung Moon, an analyst at Korea Investment & Securities Co. in Seoul. “The company has reinvented itself.” He rates Kia as “buy” and raised

To contact the reporter on this story: Seonjin Cha in Seoul at scha2@bloomberg.net

Last Updated: August 12, 2009 03:22 EDT