Magna International Inc.
(
MGA
) witnessed a 28.7% rise in profits to $1.48 per share in the
second quarter of 2012 from $1.15 in the corresponding quarter last
year, surpassing the Zacks Consensus Estimate of $1.28.
The year-over-year improvement in earnings per share was
attributable to higher profits and a fall in share count stemming
from repurchase and cancellation of common shares during the
period. In absolute terms, profits were $349 million in the
reported quarter, up 24% from $282 million in the year-ago quarter.
Revenues went up 5% to $7.7 million in the reported quarter,
exceeding the Zacks Consensus Estimate of $7.5 billion. The
increase in revenues was driven by improvement in North American
and Rest of World (ROW) production sales and higher tooling,
engineering and other sales.
Revenues in the quarter were partially offset by a decline in
complete vehicle assembly and European production sales. Vehicle
production rose 28% to 3.9 billion units in North America and 7% to
3.3 billion units in Western Europe.
Operating income augmented 30% to $470 million in the quarter from
$362 million in the year-ago quarter. The year-over-year
improvement was driven by margin expansion from increased
production sales and newly launched programs.
Segment Details
Revenues from External Production Sales (comprising North America,
Europe and ROW units) went up 7.3% to $6.6 billion in the reported
quarter. Adjusted earnings before interest and taxes (EBIT) in the
segment spiked 30.7% to $464 million from $355 million in the
comparable quarter last year.
Revenues from North America increased 11% to $3.9 billion due to
higher production volumes along with the launch of new programs.
However, revenues from Europe came down by $9 million to $2.25
billion in the period, due to a fall in production volume along
with the depreciation of Euro; resulting in decrease in U.S. dollar
sales. Revenues from the Rest of the World increased 24% to $415
million, based on accretive acquisitions and the launch of new
programs in the period.
Revenues from the Complete Vehicle Assembly segment went down 11%
to $645 million in the quarter with a 6% fall in assembly volumes
to 33,064 units. The decline was due to lower volume of Peugeot RCZ
and unfavorable currency exchange. Revenues from Tooling,
Engineering & Other grew 6% to $511 million for the second
quarter of 2012.
Financial
Magna International had $1.4 billion in cash and cash equivalent as
of June 30, 2012 compared with $1.3 billion as of December 31,
2011. The cash balance was favorably affected by cash provided from
operating activities, partially offset by lower cash flow from
investing and financing activities.
The company had total debt of $263 million as of June 30, 2012
compared with $71 million as of December 31, 2011. In the first
half of 2012, the company's cash flow from operations was $693
million compared with $203 million during the first half of 2011.
Capital expenditure amounted to $517 million in the period compared
with $370 million in the first half of 2011.
Outlook
For full year 2012, Magna expects total production sales in the
External Production segment between $24.6 billion and $25.7
billion. Complete Vehicle Assembly sales are projected in the range
of $2.3 billion to $2.6 billion.
Thus, total sales of the company are expected between $29
billion and $30.5 billion for the year. Operating margin is
expected within 5% with a tax rate of 25% for the year. Capital
expenditures for the year are expected between $1.4 billion and
$1.5 billion.
Our Take
Magna International, based in Aurora, Canada, is a leading
manufacturer and supplier of automotive components. The company
designs, develops and manufactures automotive systems, assemblies,
modules and components, besides engineering and assembling complete
vehicles, primarily for sale to original equipment manufacturers
(OEMs) of cars and light trucks. Currently, it retains a Zacks #3
Rank, which translates into a short-term (1 to 3 months) Hold
rating.
MAGNA INTL CL A (MGA): Free Stock Analysis
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