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Magna International (MGA)
Q3 2012 Earnings Call
November 08, 2012 8:00 am ET
Donald James Walker - Chief Executive Officer and Director
Vincent Galifi - Chief Financial Officer and Executive Vice President
Louis Tonelli - Vice President of Investor Relations
John Murphy - BofA Merrill Lynch, Research Division
Ravi Shanker - Morgan Stanley, Research Division
Christopher J. Ceraso - Crédit Suisse AG, Research Division
Rod Lache - Deutsche Bank AG, Research Division
Todd Coupland - CIBC World Markets Inc., Research Division
Itay Michaeli - Citigroup Inc, Research Division
Peter Sklar - BMO Capital Markets Canada
Ladies and gentlemen, thank you for standing by, and welcome to the Magna Third Quarter 2012 Conference Call. [Operator Instructions] Thank you.
I would now like to turn the conference over to Mr. Don Walker, CEO. Please go ahead, sir.
Donald James Walker
Previous Statements by MGA
» Magna International CEO Discusses Q3 2010 Results – Earnings Call Transcript
» Magna International Inc. Q2 2010 Earnings Call Transcript
» Magna International Inc. Q1 2010 Earnings Call Transcript
Yesterday, our Board of Directors met and approved our financial results for the third quarter ended September 30, 2012, and we issued a press release this morning for the quarter. You'll find the press release, today's conference call, webcast, our updated quarterly financial review, and the slide presentation to go along with the call all in the Investor Relations section of our website at www.magna.com.
Before we get started, just as a reminder, the discussion today may contain forward-looking statements within the meaning of the applicable securities legislation. Such statements involve certain risks, assumptions and uncertainties which may cause the company's actual or future results and performance to be materially different from those expressed or implied in these statements. Please refer to today's press release for a complete description of our Safe Harbor disclaimer.
Let me start by just saying that I'm very pleased with the results for the quarter. It's our best-ever sales, and also our best-ever earnings per share for a third quarter. North America, you can see from the results, continues to put up strong numbers. And Europe, we had year-over-year lower volumes, and we started to see some weakness in the German-based OEMs, and they're down in Q3 from 2011. And we see that continuing in Q4. However, we remained profitable in Europe for the quarter. As everybody has heard, some OEMs have announced upcoming plant closures in Europe, and there may be some more announcements by others given what's going on in the general economy, and specifically in Europe. We've also talked about what we're doing to make sure we have a competitive footprint here and the actions we're taking on some losing divisions, so we continue to look at that very aggressively. You can see that coming in the results, and we will continue to do what we need to do here based on what we're seeing from our customers and the market, and they have some impacts in Q4. We expect the actions we're taking and will continue to take in the Europe to yield improved operating results in the future. And that's our main goal.
In the Rest of World segment, we have a lot going on. We're making good headway in China, pleased with the results there. We have a lot of launches going on there. We also have a lot of activity going on in Brazil. In Brazil, we've improved the results in the quarter. However, we're still working through some challenges there, and we'll continue to work on that, but the results in China are right exactly where we expect them to be.
With the completion of the transaction buying out Frank Stronach's ownership in E-Car, we've integrated the component business, which is mainly electronics and electrical components for the Powertrain, into our Magna Powertrain operations, and the battery pack and vehicle integration operations have moved into our Magna Steyr business unit, which is where they came from originally.
On the acquisition front, we announced 2 acquisitions, both in the pump product area, late in the third quarter. I expect the -- we expect that to close after regulatory approval, and that should happen later this year. I'm very impressed with the technology and the manufacturing plants they have, great management team. It's a growing product area for us, so it was strategic on a number of fronts. And STT, that was a joint venture, that's closed, and that solidifies our position in North America in their product areas. So both acquisitions are good example of us continue to put our balance sheet to work to support technology and also strategic product areas.
Finally, we also announced that Frank Stronach has decided to step down from the board, effective immediately. That was in our press release. Frank is involved in a number of other activities, but specifically he's involved in the political scene in Austria. And I think Frank's point of view is he doesn't want to be confused in what his view may be from Magna's view. So the one thing which we're making quite clear inside in the company and also outside is that Frank has made enormous contributions over the many years to the culture and the way we structure our company, way we motivate people, and that's not going to change. But he has stepped off the board.