Bloomberg News

Magna Fourth-Quarter Profit Climbs 42% as Auto Output Rises

February 24, 2012

(Updates with earnings by region in seventh paragraph.)

Feb. 23 (Bloomberg) -- Magna International Inc., North America’s largest auto-parts supplier, said fourth-quarter profit jumped 42 percent, beating analysts’ estimates, as car and light-truck production increased in the region.

Net income rose to $312 million, or $1.32 a share, from $219 million, or 89 cents, a year earlier, the Aurora, Ontario- based company said today in a statement. Sales gained 13 percent to $7.25 billion, boosting revenue for all of 2011 to $28.7 billion. Magna forecast sales of $28 billion to $29.5 billion this year.

North American vehicle production increased 10 percent to 13.1 million vehicles in 2011, including a fourth-quarter rise of 15 percent to 3.44 million, Magna said. U.S. sales of cars and light trucks gained 10 percent last year to 12.8 million, according to Woodcliff Lake, New Jersey-based Autodata Corp.

“Industry production and sales data through the quarter continued to show growth in North America and Europe,” Steve Arthur, an analyst at RBC Capital Markets in Toronto, said in a Feb. 16 note to clients. He rates Magna shares “outperform.”

Magna today also raised its dividend to 27.5 cents a share from 25 cents, the first increase since February 2011.

Excluding one-time items, Magna reported profit of $1.46 a share. That exceeded the $1.02 average of 17 analyst estimates compiled by Bloomberg.

European ‘Disappointment’

Adjusted earnings before interest and taxes rose 28 percent in the quarter to $321 million, buoyed by a 22 percent increase in profit at the company’s North American unit. On that basis, Magna’s European unit posted a loss of $3 million, compared with profit of $20 million a year earlier.

“Europe was a disappointment in 2011,” Chief Executive Officer Don Walker told analysts on a conference call. Still, fourth-quarter results showed an improvement from the previous three months, “and we expect further improvement through 2012,” he said.

Magna expects the auto-parts industry to continue to consolidate in the long term as carmakers expand globally, Walker said.

The company is “looking at a number of different things, no more or less than we have traditionally been looking at, but there are a lot of opportunities out there,” Walker said. “I suspect we will continue to make some acquisitions.”

He didn’t elaborate.

Magna fell 1.1 percent to C$44.95 at the close in Toronto today. The shares have risen 32 percent this year.

--Editors: Bill Koenig, John Lear

To contact the reporter on this story: Frederic Tomesco in Montreal at

To contact the editor responsible for this story: Ed Dufner at

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