Magna Expands in South America - Analyst Blog


Magna International Inc. ( MGA ) announced that its body and chassis systems operating unit, Cosma International, has closed a transaction with Germany-based ThyssenKrupp Automotive Systems GmbH to acquire the latter's Brazilian unit, ThyssenKrupp Automotive Systems Industrial do Brasil Ltd (TKASB).

TKASB manufactures and assembles chassis structural components and modules for Brazilian original equipment manufacturers (OEMs). It operates four facilities in the country, located in Sao Bernardo do Campo, Ibirité, Camacari and São José dos Pinhais, and employs 770 people.

TKASB generated revenues of $250 million for its fiscal year ended September 30, 2011. Currently, it supplies automotive components to Ford Motor Co. ( F ) , Fiat SpA ( FIATY ), Renault-Nissan, Honda Motor Co. ( HMC ) and PSA Peugeot Citroen.

With this acquisition, Magna will become the leading supplier of metal-forming and chassis system to OEMs in South America. It will also add to the company's existing nine manufacturing facilities, two R&D facilities and approximately 3,650 employees in the region.

Cosma International manufactures a comprehensive range of metal body systems, components, assemblies and modules for major automakers including General Motors Co. ( GM ), Honda, Hyundai/Kia, Jaguar, Mercedes-Benz Smart, Mitsubishi, Porsche, PSA Peugeot Citroen, Renault-Nissan, Subaru, Suzuki, Toyota Motor Corp. ( TM ) and Audi.

Magna has been expanding its global footprints, especially in the emerging markets. Few months back, the company's exterior and interior operating unit expanded in China through a joint venture, MCC Wuhu Exteriors, with Changshu Automotive Trim Co. and Chery Tech. At the same time, it purchased a 300,000-square-foot injection molding and painting facility in Wuhu, located in the Anhui province of southeastern China.

Last month, the company also announced that it has entered into an agreement to acquire four die casting operations of BDW Technologies in Europe. Two of the operations are located in Germany, one in Hungary and the remaining one in Poland.

The acquisition will be closed by Cosma in the first quarter of 2012. It is expected to strengthen Cosma's product portfolio and will enable the company to deliver lightweight solutions for complex structural and chassis components in steel, aluminum or aluminum-steel hybrid to customers across the world.

Magna, a Zacks #4 Rank (Sell) stock, is a leading manufacturer and supplier of automotive components based in Aurora, Canada. The company designs, develops and manufactures automotive systems, assemblies, modules and components, besides engineering and assembling complete vehicles, primarily for sale to OEMs of cars and light trucks.

The company earned $226 million or 94 cents per share in the third quarter of the year compared with $256 million or $1.10 per share in the same quarter a year-ago. Revenues increased 21% to $6.97 billion driven by higher sales across all its operations. Gross profit improved 2% to $769 million, despite a 24% rise in cost of goods sold to $6.20 billion.

Magna expects total sales to range between $28.1 billion and $28.9 billion for full year 2011. Based on operating regions, the company anticipates sales to range between $13.6 billion and $13.9 billion in North America, $8.5 billion and $8.7 billion in Europe and $23.4 billion and $24.0 billion in Rest of the World for the year.

FORD MOTOR CO ( F ): Free Stock Analysis Report
FIAT SPA ( FIATY ): Free Stock Analysis Report

GENERAL MOTORS ( GM ): Free Stock Analysis Report
HONDA MOTOR ( HMC ): Free Stock Analysis Report
MAGNA INTL CL A ( MGA ): Free Stock Analysis Report
TOYOTA MOTOR CP (TM): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: F , FIATY , GM , HMC , MGA

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