Auto parts supplier Magna's quarterly results miss on fewer vehicle assemblies (updated)

Magna International

02/08/2024 15:44

(Adds details on layoffs at company's unit in paragraph 3,
sales impact in paragraph 5)
    By Nathan Gomes
       Aug 2 (Reuters) - Canada's Magna International  MG.TO 
missed analysts' estimates for second-quarter results, hurt by
production being stopped for certain vehicles and lower volumes
of automobiles assembled, sending the auto parts supplier's
shares down about 2%.
    The company, which counts BMW  BMWG.DE , Mazda  7261.T  and
Ferrari  RACE.MI  as customers, produces parts and builds
vehicles at its complete vehicle manufacturing unit for various
automakers.
    There were layoffs at Magna's complete vehicle operations,
the company said on Friday, adding that the job cuts started
earlier this year.
    "Sales were negatively impacted by the end of production of
certain programs, lower complete vehicle assembly volumes,
including as a result of the end of production of the BMW
5-Series," Magna said.
    The company expects INEOS Automotive's vehicle program
cancellation to lead to about $700 million in lost sales. In
May, Magna recorded asset impairments and restructuring costs of
$316 million related to embattled EV startup Fisker.
    Demand for automotive parts and services had risen over the
past few years, but that has taken a hit with automakers
shifting away from their costly electric vehicle plans to focus
on gas-powered models.
    Magna's complete vehicle unit is a drag on consolidated
margins, CFRA analyst Garrett Nelson said, adding that Fisker's 
bankruptcy and challenges of other EV makers have become a
significant headwind for the supplier.
    Rival Aptiv  APTV.N  beat Wall Street expectations for
quarterly profit on Thursday. However, revenue from the
company's segment which makes electrical components declined 3%
due to a reduction in production by some customers.
    Ontario-based Magna lowered its 2026 sales forecast range to
$44.0 billion to $46.5 billion, compared with its prior view of
$48.8 billion to $51.2 billion.
    On an adjusted basis, the company earned $1.35 per share in
the second quarter ending June, compared with estimates of
$1.44, according to LSEG data.
    Its overall quarterly revenue fell marginally to $10.96
billion, missing estimates of about $11 billion.

 (Reporting by Nathan Gomes in Bengaluru; Editing by Shounak
Dasgupta)
 ((Nathan.Gomes@thomsonreuters.com))