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    MG   CA5592224011

MAGNA INTERNATIONAL INC.

(MG)
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Auto parts maker Magna's results beat as China leads recovery

05/06/2021 | 11:24am EDT

(Reuters) - Canadian auto parts maker Magna International Inc on Thursday beat estimates for quarterly profit and revenue driven by strong demand for car structures in China, which is leading the sector's recovery from the COVID-19 crisis.

While light vehicle production surged 87% in China, it was flat in North America and increased 5% in Europe, the company's two largest markets.

Automotive production slowed in early 2020 because of hard lockdowns caused by the pandemic but has come roaring back, especially in China, as consumers look to travel in private vehicles rather than take public transport.

But the recovery is being threatened by a global chip shortage that has hit auto production in North America and Europe, forcing car makers to shut factories and incur billion of dollars in costs.

The company cautioned it could face issues while accessing some critical materials such as chemicals for seating foam and resins for plastic components, besides saying the semiconductor crunch would continue to have an impact through the remainder of 2021.

Semiconductors are used extensively in cars, for everything from engine performance monitoring to parking sensors.

Magna, which makes parts such as body structures, chassis and powertrain for customers including Ford Motor and Volkswagen, slightly lowered its full-year estimates for light vehicle production in North America that is grappling with material shortages as the region eases out of the health crisis and economic recovery picks pace.

Also, auto parts maker Dana Inc last week warned it was seeing a more meaningful impact from the chip constraint during the second quarter in its light vehicle business.

CFRA Research analyst Garrett Nelson, however, remained optimistic about Magna's prospects as the global markets electrify.

"Partnerships with upstart EV manufacturers such as Fisker and demand for its new electrification-focused products represent a source of potential upside," Nelson wrote in a note.

Magna marginally raised its full-year revenue forecast to $40.2 billion-$41.8 billion, from its prior expectation of revenue between $40.0 billion to $41.6 billion.

Adjusted earnings of $1.86 per share was above analysts' expectation of $1.57, according to Refinitiv.

Total sales rose 17.5% to $10.18 billion, beating estimates of $9.53 billion.

Magna's shares were up about 1% in early trading on the Toronto stock exchange.

(Reporting by Shreyasee Raj in Bengaluru; Editing by Shailesh Kuber)

By Shreyasee Raj


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
DANA INCORPORATED 1.90% 24.19 Delayed Quote.21.62%
FISKER INC. -1.19% 19.04 Delayed Quote.31.54%
FORD MOTOR COMPANY -1.04% 15.26 Delayed Quote.75.43%
MAGNA INTERNATIONAL INC. 2.04% 116.7 Delayed Quote.26.92%
UPSTART HOLDINGS, INC. -1.37% 123.42 Delayed Quote.207.09%
VOLKSWAGEN AG 0.41% 218.85 Delayed Quote.43.58%
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Financials (USD)
Sales 2021 41 011 M - -
Net income 2021 2 387 M - -
Net Debt 2021 2 104 M - -
P/E ratio 2021 11,8x
Yield 2021 1,85%
Capitalization 28 019 M 27 950 M -
EV / Sales 2021 0,73x
EV / Sales 2022 0,66x
Nbr of Employees 158 000
Free-Float 98,9%
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Mean consensus OUTPERFORM
Number of Analysts 20
Last Close Price 92,93 $
Average target price 103,61 $
Spread / Average Target 11,5%
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Managers and Directors
NameTitle
Seetarama Kotagiri President & Chief Executive Officer
Vincent J. Galifi Chief Financial Officer & Executive Vice President
Bill L. Young Chairman
Paul Bellack Vice President-Information Technology
Sherif Salah Marakby Executive Vice President-Research & Development
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