Magna Updates 2021 Outlook
October 20 2021 - 6:32AM
Magna International Inc. (TSX: MG; NYSE: MGA) today announced that
it has updated its 2021 outlook to reflect declines in anticipated
2021 light vehicle production, including 7% and 9% in North America
and Europe, respectively, in each case relative to expected light
vehicle production levels disclosed in our press release dated
August 6, 2021. The lower expected light vehicle production is
mainly due to the impacts of ongoing semiconductor chip shortages
and the COVID-19 pandemic on the global automotive supply chain.
As a result of the lower assumed light vehicle production, as
noted above, we now expect total sales for 2021 to be in the range
of $35.4 to $36.4 billion, compared to $38.0 to $39.5 billion in
our August outlook. Adjusted EBIT Margin(1) is now expected to be
in the 5.1% to 5.4% range, compared to 7.0% to 7.4% in our August
outlook primarily as a result of the decline in expected total
sales, ongoing operational inefficiencies driven by unpredictable
OEM production schedules, increased production costs, higher
commodity costs and a provision on engineering service contracts
with Evergrande.
We will report our financial results for the third quarter of
2021 on November 5, 2021.
(1) Adjusted EBIT Margin is the ratio of
Adjusted EBIT to Total Sales
TAGSOutlook, sales, vehicle production, semiconductor chip
INVESTOR CONTACTLouis Tonelli, Vice-President, Investor
Relations louis.tonelli@magna.com, 905.726.7035
MEDIA CONTACT Tracy Fuerst, Vice President, Corporate
Communications and PRtracy.fuerst@magna.com, 248.761.7004
ABOUT MAGNAMagna is more than one of the world’s
largest suppliers in the automotive space. We are a mobility
technology company with a global, entrepreneurial-minded team of
158,000 employees and an organizational structure designed to
innovate like a startup. With 60+ years of expertise, and a systems
approach to design, engineering and manufacturing that touches
nearly every aspect of the vehicle, we are positioned to support
advancing mobility in a transforming industry. Our global network
includes 347 manufacturing operations and 87 product development,
engineering and sales centers spanning 28 countries.
For further information about Magna, please
visit www.magna.com or follow us on Twitter @MagnaInt.
FORWARD-LOOKING STATEMENTSCertain statements in
this press release constitute "forward-looking information" or
"forward-looking statements" (collectively, "forward-looking
statements"). Any such forward-looking statements are intended to
provide information about management's current expectations and
plans and may not be appropriate for other purposes.
Forward-looking statements may include financial and other
projections, as well as statements regarding our future plans,
strategic objectives or economic performance, or the assumptions
underlying any of the foregoing, and other statements that are not
recitations of historical fact. We use words such as "may",
"would", "could", "should", "will", "likely", "expect",
"anticipate", "believe", "intend", "plan", "aim", "forecast",
"outlook", "project", "estimate", "target" and similar expressions
suggesting future outcomes or events to identify forward-looking
statements. The following table identifies the material
forward-looking statements contained in this document, together
with the material potential risks that we currently believe could
cause actual results to differ materially from such forward-looking
statements. Readers should also consider all of the risk factors
which follow below the table:
Material Forward-Looking Statement |
Material Potential Risks Related to Applicable
Forward-Looking Statement |
Light vehicle production |
- Light vehicle sales levels
- Supply disruptions, including as a
result of the current semiconductor chip shortage
- Production allocation decisions by
OEMs
|
Total Sales |
- Economic impact of COVID-19 on
consumer confidence
- Supply disruptions, including as a
result of the current semiconductor chip shortage
- Concentration of sales with six
customers
- Shifts in market shares among
vehicles or vehicle segments
- Shifts in consumer “take rates” for
products we sell
|
Adjusted EBIT Margin |
- Same risks as for Total Sales
above
- Operational underperformance
- Higher costs incurred to mitigate
the risk of supply disruptions, including: materials price
increases; higher-priced substitute supplies; premium freight costs
to expedite shipments; production inefficiencies due to production
lines being stopped/restarted unexpectedly based on customers’
production schedules; price increases from sub-suppliers that have
been negatively impacted by production inefficiencies; and
potential claims against us if customer production is
disrupted
- Price concessions
- Commodity cost volatility
- Higher labour costs
- Tax risks
|
Forward-looking statements are based on
information currently available to us and are based on assumptions
and analyses made by us in light of our experience and our
perception of historical trends, current conditions and expected
future developments, as well as other factors we believe are
appropriate in the circumstances. While we believe we have a
reasonable basis for making any such forward-looking statements,
they are not a guarantee of future performance or outcomes. In
addition to the factors in the table above, whether actual results
and developments conform to our expectations and predictions is
subject to a number of risks, assumptions and uncertainties, many
of which are beyond our control, and the effects of which can be
difficult to predict, including, without limitation:
Risks Related to the Automotive Industry
- economic cyclicality;
- regional production volume declines, including as a result of
the COVID-19 pandemic;
- intense competition;
- potential restrictions on free trade;
- trade disputes/tariffs;
Customer and Supplier Related Risks
- concentration of sales with six customers;
- emergence of potentially disruptive Electric Vehicle OEMs;
- OEM consolidation and cooperation;
- shifts in market shares among vehicles or vehicle
segments;
- shifts in consumer "take rates" for products we sell;
- quarterly sales fluctuations;
- potential loss of any material purchase orders;
- a deterioration in the financial condition of our supply base,
including as a result of the COVID-19 pandemic;
Manufacturing Operational Risks
- product and new facility launch risks;
- operational underperformance;
- restructuring costs;
- impairment charges;
- labour disruptions;
- COVID-19 shutdowns;
- supply disruptions, including with respect to semiconductor
chips;
- higher costs to mitigate supply disruptions;
- climate change risks;
- attraction/retention of skilled labour and leadership
succession;
IT Security/Cybersecurity Risk
- IT/Cybersecurity breach;
- Product Cybersecurity breach;
Pricing Risks
- pricing risks between time of quote and start of
production;
- price concessions;
- commodity cost volatility;
- declines in scrap steel/aluminum prices;
|
Warranty / Recall Risks
- costs related to repair or replacement of defective products,
including due to a recall;
- warranty or recall costs that exceed warranty provision or
insurance coverage limits;
- product liability claims;
Acquisition Risks
- competition for strategic acquisition targets;
- inherent merger and acquisition risks;
- acquisition integration risk;
Other Business Risks
- risks related to conducting business through joint
ventures;
- our ability to consistently develop and commercialize
innovative products or processes;
- our changing business risk profile as a result of increased
investment in electrification and autonomous driving, including:
higher R&D and engineering costs, and challenges in quoting for
profitable returns on products for which we may not have
significant quoting experience;
- risks of conducting business in foreign markets;
- fluctuations in relative currency values;
- tax risks;
- reduced financial flexibility as a result of an economic
shock;
- changes in credit ratings assigned to us;
Legal, Regulatory and Other Risks
- antitrust risk;
- legal claims and/or regulatory actions against us; and
- changes in laws and regulations, including those related to
vehicle emissions or made as a result of the COVID-19
pandemic.
|
In evaluating forward-looking statements or
forward-looking information, we caution readers not to place undue
reliance on any forward-looking statement. Additionally, readers
should specifically consider the various factors which could cause
actual events or results to differ materially from those indicated
by such forward-looking statements, including the risks,
assumptions and uncertainties above which are:
- discussed under the “Industry
Trends and Risks” heading of our most current Management’s
Discussion and Analysis; and
- set out in our Annual Information
Form filed with securities commissions in Canada, our annual report
on Form 40-F filed with the United States Securities and Exchange
commission, and subsequent filings.
Readers should also consider discussion of our
risk mitigation activities with respect to certain risk factors,
which can be also found in our Annual Information Form.
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