Magna reports Q3 profit and sales up, trims forecast for full year

AURORA, Ont. – Magna International Inc. trimmed its outlook for the year in its latest earnings results but says overall volumes in the auto industry remain strong.

The company’s expectations of total light vehicle production from North America have dropped by about 400,000 vehicles since the start of the year to 17 million, including 200,000 from last quarter, but are still favourable, said Vince Galifi, Magna’s chief financial officer on an earnings call Thursday.

“They are healthy volume levels. Sure it’s come off a bit, but some of them are at really good levels. The macroeconomic environment in the United States is still very favourable.”

The forecast for European production was lowered to 22.5 million from 22.6 million.

The company is also seeing some slowing in the Chinese market, with an expected dip of about six per cent next quarter compared with last year.

So far tariffs on steel and aluminum as well as on Chinese exports have not had a dramatic impact, but could get worse said company CEO Don Walker.

He said his expectation would be that steel and aluminum tariffs would be gone by the end of the year but that there is much that remains unknown.

“There is a lot of moving pieces here. If they remain longer, it will make more pressure to the supply chain, we’re going to have more discussions with our customers.”

The company, which reports in US dollars, said tariffs cost it about US$8 million in the quarter. If tariffs remain into next year costs could go to $15 million, said Galifi.

“That impact could be about $15 million a quarter, but again what happens if the tariffs go to 25 per cent, if the U.S. tariffs go away, the retaliatory tariffs go away, there’s a whole bunch of open questions at this point.”

The Aurora, Ont.-based company said Thursday it earned $554 million or $1.62 per share for the quarter ended Sept. 30, up from $512 million or $1.38 per share a year ago.

Revenue totalled nearly $9.62 billion, up from $8.86 billion in the same quarter last year.

Magna International Inc. reported its third-quarter profit grew compared with a year ago as revenue also climbed higher, but the auto parts maker trimmed the outlook for the year.

In its outlook, the company now expects total sales between $40.3 billion and $41.4 billion this year, down from between $40.3 million and $42.5 billion.

Magna also lowered its profit expectations for 2018 to between $2.3 billion and $2.4 billion, compared with its earlier forecast of between $2.3 billion and $2.5 billion.

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