Magna Cuts Outlook as Income Jumps 68%

Magna International Inc. reports its adjusted net income in the first quarter of 2019 surged to US$1.1 billion from $660 million in the same period last year.

But revenue in January-March slipped 2% to $10.6 billion, and adjusted pretax earnings fell 18% to $720 million.

EBIT as a percentage of sales fell to 6.8% from 8.1% in last year’s first quarter. Magna blames higher engineering costs in its Power & Vision business, launch costs for new seating programs and a rise in the company’s lower-margin contract vehicle production operations.

The giant Canadian supplier lowered its outlook, pointing to higher-than-expected costs for advanced technology products, a drop in estimated global car production and slumping income from a Getrag transmission joint venture in China.

Magna now predicts light-vehicle output in North America will total 16.7 million units in 2019 compared with its previous estimate of 17.0 million. The company anticipates production in Europe will total 21.5 million units, down from its previous guidance of 22.3 million.

The company also lowered its total sales forecast to about $40 billion, trimmed its adjusted EBIT margin to 6.7%-7.0% and reduced its net income outlook to $1.9 billion-$2.1 billion from $2.1 billion-$2.3 billion.