Magna expects banner year on strengthening auto sales
Profit up 23%, revenue up 6% on demand in North America, Europe
Magna International Inc. says it's raising its full-year sales forecasts after profits climbed more than expected in the second quarter on strong demand in North America and Europe.
That's up 23 per cent from net income of $415 million, or $1.78 per diluted share, in the same period a year ago.
Sales increased six per cent to a record $9.46 billion in the quarter, a period which saw vehicle production grow three per cent in North America and two per cent in Europe.
A hit from South American inflation
However, the company noted that while the two regions saw growth, the rest of its international production sales, vehicle assembly sales and tooling and other areas fell 33 per cent to $163 million compared to the same period last year. The loss was partly attributed to inflation related costs in South America.
"The increase reflects higher production sales in North America, Europe and Asia partially offset by lower production sales in our rest of world segment and lower complete vehicle assembly sales," chief financial offer Vince Galifi told analysts during a conference call.
Magna's complete vehicle assembly sales fell to $793 million in the quarter compared to $796 million a year ago.
The strong demand for sales in Europe and North American helped push the company to boost its sale forecast for the year to a range of $35.6 billion to $37.3 billion from previous guidance of $34.9 billion to $36.6 billion.
Chief executive Don Walker also said Magna was still looking towards acquisitions for growth.
Looking at acquisitions
"Really haven't changed what we are focused on. We continue to look at acquisitions," he said.
"If we can find the right acquisition, and we were looking at all lot, various sizes some smaller, some medium-size so we are not going to be more aggressive just for the sake of being more aggressive but that is still our preference."
Walker said the company's preference will continue to be buying assets, rather than selling off current divisions for gains.
"As far as acquisitions, we prefer to be buying things and expanding our business obviously rather than selling it but I think you can expect to see us continue the analysis and executions we talked about in the past," he said.
Magna is a global automotive supplier with more than 13,000 employees at 317 manufacturing sites and 83 product development, engineering and sales centres in 29 countries.