Bloomberg News

Magna Shares Jump as Profit Rises, Forecast Increased

May 10, 2012

Magna International Inc. (MG), North America’s largest auto-parts supplier, rose the most since February after it reported that first-quarter profit rose 6.5 percent and raised its full-year sales forecast.

Magna surged 4.1 percent to C$44.42 at 1:19 p.m. Toronto time, the biggest intraday jump since Feb. 24, after having reached C$45.95. The shares gained 26 percent this year before today. Net income totaled $343 million, or $1.46 a share, from $322 million, or $1.30, a year earlier, the Aurora, Ontario- based company said today in a statement.

North American light-vehicle production rose 17 percent in the first quarter to 3.97 million units, according to researcher IHS Automotive. That helped boost Magna sales by 6.6 percent to $7.67 billion. The average estimate of nine analysts was for sales of $7.49 billion, according to data compiled by Bloomberg.

Magna raised its annual sales forecast to as much as $30.5 billion, from a Feb. 24 projection of as much as $29.5 billion. The company also said it expects the industry to make 14.4 million vehicles in North America. Magna in February projected output of 13.8 million vehicles.

Separately, Magna said today it signed a “memorandum of understanding” to produce an entry-level Infiniti luxury vehicle for Nissan Motor Co. (7201) starting in 2014. No details were disclosed about where the vehicle will be produced.

Potential Acquisitions

Magna, which ended the quarter with $1.27 billion in cash, said it is looking at “a number” of potential acquisitions, Don Walker, chief executive officer, said to reporters today after the annual meeting in Toronto.

“If we can get technology or gain business with a customer we want to grow with, we’ll certainly look at it,” Walker said. “There are a number we’re looking at right now.”

While the company typically has made acquisitions of companies with $600 million in annual revenue, spending $200 million to $250 million, it is willing to spend much more, Walker said,

“Typically we look at smaller acquisitions, but we have the ability to do big ones, too,” he said, such as those that are “much bigger” than a company with $600 million in revenue.

To contact the reporter on this story: Mark Clothier in Toronto at mclothier@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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