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Magna reports record third quarter results

Auto News - Published on Mon, 12 Nov 2018

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Magna International Inc reported financial results for the third quarter ended September 30, 2018. Third quarter records for sales, diluted earnings per share and Adjusted diluted earnings per share, and returned USD 629 million to shareholders through share repurchases and dividends. All of our operating segments reported sales growth compared to the third quarter of 2017 and, excluding both acquisitions net of divestitures and foreign exchange movements, sales for all segments outgrew global light vehicle production. However, our sales were slightly lower than we had anticipated, mainly due to lower than expected light vehicle production. Adjusted EBIT was below the comparable quarter in 2017 and was less than what we expected. After taking into account the impact of lower than anticipated volumes, our Power & Vision, Seating Systems and Complete Vehicles segments performed substantially in line with our expectations. However, our Body Exteriors & Structures segment reported results below our expectations, mainly as a result of higher than anticipated launch costs and underperformance at certain facilities, largely offset by a favourable customer pricing resolution.

On a consolidated basis, we posted sales of USD 9.62 billion for the third quarter of 2018, an increase of 9% over the third quarter of 2017. The strong growth was achieved in a period in which light vehicle production increased 4% in North America and was essentially unchanged in Europe. Excluding the impact of foreign currency translation and net divestitures, sales increased 11% on a consolidated basis, and by segment: 6% in both Body Exteriors & Structures and Power & Vision, 5% in Seating Systems, and 50% in Complete Vehicles.

Adjusted EBIT of USD 699 million in the third quarter of 2018 decreased 1.0%, resulting in an adjusted EBIT as a percentage of sales of 7.3% in the third quarter of 2018 compared to 8.0% in the third quarter of 2017. This margin decline was largely driven by:

1. an increase in the proportion of sales generated in our Complete Vehicles segment relative to total sales, which have a significantly lower margin than our consolidated average;
2. lower margins in the third quarter of 2018 in our Seating Systems segment, mainly associated with pre-operating costs incurred at new facilities and favourable customer pricing resolutions in the third quarter of 2017; and
3. lower margins in our Power & Vision segment, largely reflecting increased spending for electrification and autonomy.
Income from operations before income taxes of USD 674 million decreased 1.0% in the third quarter of 2018.

Net income attributable to Magna International Inc. increased 8% to USD 554 million for the third quarter of 2018, substantially reflecting a lower income tax rate.

Diluted earnings per share increased 17% to USD 1.62 in the third quarter of 2018, reflecting higher net income attributable to Magna International Inc., and the favourable impact of a reduced share count. Adjusted diluted earnings per share increased 12% to USD 1.56 compared to USD 1.39 for the third quarter of 2017.

In the third quarter of 2018, we generated cash from operations before changes in operating assets and liabilities of USD 899 million, and USD 177 million in operating assets and liabilities. Investment activities for the third quarter of 2018 included USD 381 million in fixed asset additions, and a USD 114 million increase in investments, other assets and intangible assets.

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Posted By : Joykumar Irom on Mon, 12 Nov 2018
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