Magna announces second quarter results

Aug 9, 2019   Tier Suppliers

Magna International Inc. has reported financial results for the second quarter ended June 30, 2019.

 

    THREE MONTHS ENDED
JUNE 30,
  SIX MONTHS ENDED
JUNE 30,

 
  2019   2018   2019   2018
Reported                
                         
Sales   $ 10,126   $ 10,280   $   20,717   $   21,072
                 
Income from operations before income taxes   $   595   $   819   $   1,963   $   1,670
                 
Net income attributable to Magna International Inc.   $   452   $   626   $   1,558   $   1,286
                 
Diluted earnings per share   $   1.42   $   1.77   $   4.83   $   3.60
                 
Non-GAAP Financial Measures(1)                
                         
Adjusted EBIT   $   677   $   803   $   1,397   $   1,678
                 
Adjusted diluted earnings per share   $   1.59   $   1.67   $   3.22   $   3.51
                 
All results are reported in millions of U.S. dollars, except per share figures, which are in US dollars.

(1)  Adjusted EBIT, Adjusted diluted earnings per share and Adjusted EBIT as a percentage of sales are Non-GAAP financial measures that have no standardized meaning under U.S.GAAP, and as a result may not be comparable to the calculation of similar measures by other companies. A reconciliation of these Non-GAAP financial measures is included in the back of this press release.

 

Three months ended June 30, 2019

Magana has stated that, Overall, our results came in slightly ahead of our expectations in the second quarter of 2019, driven by our Body Exteriors & Structures, Power & Vision and Complete Vehicles segments.  Our Seating segment was below our expectations mainly due to continued launch costs and inefficiencies at a new facility.

On a consolidated basis, we posted sales of $10.13 billion for the second quarter of 2019, a decrease of 1% from the second quarter of 2018, which compares favourably to global light vehicle production that decreased 6%.  Excluding the impact of foreign currency translation and divestitures net of acquisitions, sales increased 5%, and by segment: Complete Vehicles, Seating and Power & Vision increased 49%, 3% and 1%, respectively, while Body Exteriors & Structures decreased 4%.

Adjusted EBIT decreased 16% to $677 million in the second quarter of 2019 resulting in an adjusted EBIT as a percentage of sales of 6.7% in the second quarter of 2019 compared to 7.8% in the second quarter of 2018.  This is mainly due to lower margins in our:

  • Power & Vision segment, largely driven by higher engineering and other costs in our ADAS business, and lower equity income;
  • Seating segment primarily as a result of higher launch costs and inefficiencies at a new facility, lower equity income, and higher commodity costs; and
  • Body Exteriors & Structures segment primarily as a result of reduced earnings due to lower sales.  

Income from operations before income taxes was $595 million for the second quarter of 2019 compared to $819 million in the second quarter of 2018.  Included in income from operations before income taxes in the second quarter of 2019 were Other expense, net items totaling $68 million comprised of net unrealized losses on the revaluation of our investments and restructuring costs partially offset by an adjustment to the gain on the sale of our Fluid Pressure & Controls business.  Income from operations before income taxes in the second quarter of 2018 included Other income, net items totaling $39 million.  Excluding Other expense (income), net from both periods, income from operations before income taxes decreased $117 million in the second quarter of 2019 compared to the second quarter of 2018.

Net income attributable to Magna International Inc. was $452 million for the second quarter of 2019 compared to $626 million in the second quarter of 2018.  Included in net income attributable to Magna International Inc. in the second quarter of 2019 were Other expense, net items totaling $57 million after tax.  Net income attributable to Magna International Inc. in the second quarter of 2018 included Other income, net items totaling $36 million after tax.  Excluding Other expense (income), net from both periods, net income attributable to Magna International Inc. decreased $81 million in the second quarter of 2019 compared to the second quarter of 2018.

Diluted earnings per share decreased to $1.42 in the second quarter of 2019, compared to $1.77 in the comparable period.  Adjusted diluted earnings per share decreased 5% to $1.59compared to $1.67 for the second quarter of 2018.

In the second quarter of 2019, we generated cash from operations of $920 million.  Investment activities for the second quarter of 2019 were $587 million, including $328 millionin fixed asset additions, $152 million in acquisitions, and a $107 million increase in investments, other assets and intangible assets.

Six months ended June 30, 2019

We posted sales of $20.72 billion for the six months ended June 30, 2019, a decrease of 2% from the six months ended June 30, 2018, which compares favourably with global light vehicle production which decreased 5% in the first six months of 2019 compared to the first six months of 2018. Excluding the impact of foreign currency translation and divestitures net of acquisitions, sales increased 4% and by segment: Complete Vehicles increased 36%, Seating increased 3%, Power & Vision was unchanged and Body Exteriors & Structures decreased 4%; in each case compared to the six months ended June 30, 2018. 

During the six months ended June 30, 2019, income from operations before income taxes was $1.96 billion, net income attributable to Magna International Inc. was $1.56 billion and diluted earnings per share was $4.83, increases of $293 million, $272 million and $1.23, respectively, each compared to the first six months of 2018.

During the six months ended June 30, 2019, Adjusted EBIT decreased 17% to $1.40 billion, and Adjusted diluted earnings per share decreased 8% to $3.22, each compared to the six months ended June 30, 2018.

During the six months ended June 30, 2019, we generated cash from operations before changes in operating assets and liabilities of $1.81 billion, and invested $294 million in operating assets and liabilities. Total investment activities for the first six months of 2019 were $920 million, including $579 million in fixed asset additions, $152 million in acquisitions, and $189 million in investments, other assets and intangible assets.

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