Magna International Inc. (TSX: MG; NYSE: MGA) today reported
financial results for the third quarter ended September 30, 2021.
Please click HERE for full third quarter
Financial Statements and MD&A.
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|
THREE MONTHS ENDEDSEPTEMBER 30, |
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NINE MONTHS ENDEDSEPTEMBER 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Reported |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
7,919 |
|
$ |
9,129 |
|
$ |
27,132 |
|
$ |
22,079 |
|
|
|
|
|
|
|
|
|
Income from operations before income taxes |
|
$ |
27 |
|
$ |
436 |
|
$ |
1,372 |
|
$ |
33 |
|
|
|
|
|
|
|
|
|
Net income attributable to Magna International Inc. |
|
$ |
11 |
|
$ |
405 |
|
$ |
1,050 |
|
$ |
19 |
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
0.04 |
|
$ |
1.35 |
|
$ |
3.46 |
|
$ |
0.06 |
|
|
|
|
|
|
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|
|
Non-GAAP Financial
Measures(1) |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBIT |
|
$ |
229 |
|
$ |
778 |
|
$ |
1,556 |
|
$ |
581 |
|
|
|
|
|
|
|
|
|
Adjusted diluted earnings per share |
|
$ |
0.56 |
|
$ |
1.95 |
|
$ |
3.83 |
|
$ |
1.12 |
|
|
|
|
|
|
|
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All results
are reported in millions of U.S. dollars, except per share figures,
which are in U.S. dollars |
|
(1) Adjusted EBIT and Adjusted diluted earnings per
share 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. |
A photo accompanying this announcement is available
athttps://www.globenewswire.com/NewsRoom/AttachmentNg/60ffd1d6-41cc-4523-abda-aa402bb4a8b8
THREE MONTHS ENDED SEPTEMBER 30,
2021
Sales and Adjusted EBIT came in below our
expectations in the third quarter of 2021, as vehicle production
was significantly lower than anticipated largely due to ongoing
semiconductor chip shortages which drove unpredictable customer
production schedules, resulting in labour and other operational
inefficiencies at our facilities. In addition, our results were
negatively impacted by higher production costs, including
freight and commodity costs, as well as a provision on engineering
service contracts with the automotive unit of Evergrande.
On a consolidated basis, we posted sales of $7.9
billion for the third quarter of 2021, a decrease of 13% from the
third quarter of 2020, compared to global light vehicle production
that decreased 12%, including declines of 20% in Europe, 19% in
North America and 12% in China.
Adjusted EBIT decreased to $229 million in the
third quarter of 2021 compared to $778 million in the third quarter
of 2020. The decrease mainly reflected lower margins earned on
reduced sales, labour and other operational inefficiencies at our
facilities, higher production costs, including freight and
commodity costs, and a provision on engineering service contracts
with the automotive unit of Evergrande as well as the benefit of
COVID-19 related government employee support programs during the
third quarter of 2020.
Income from operations before income taxes was
$27 million for the third quarter of 2021 compared to $436 million
in the third quarter of 2020. Included in income from operations
before income taxes were other expense, net items totaling $180
million and $316 million in the third quarters of 2021 and 2020,
respectively. Excluding other expense, net from both periods,
income from operations before income taxes decreased $545 million
in the third quarter of 2021 compared to the third quarter of
2020.
Net income attributable to Magna International
Inc. was $11 million for the third quarter of 2021 compared to $405
million in the third quarter of 2020. Included in net income
attributable to Magna International Inc. were other expense, net
items totaling $159 million after tax and income attributable to
non-controlling interests in the third quarter of 2021, compared to
$180 million after tax and loss attributable to non-controlling
interests in the third quarter of 2020. Excluding other expense,
net from both periods, net income attributable to Magna
International Inc. decreased $415 million in the third quarter of
2021 compared to the third quarter of 2020.
Diluted earnings per share was $0.04 in the
third quarter of 2021, compared to $1.35 in the comparable period.
Adjusted diluted earnings per share was $0.56 compared to $1.95 for
the third quarter of 2020.
In the third quarter of 2021, we generated cash
from operations before changes in operating assets and liabilities
of $532 million and used $132 million in operating assets and
liabilities. Investment activities for the third quarter of 2021
included $334 million in fixed asset additions, $101 million in
investments, other assets and intangible assets, $454 million in
acquisitions and $3 million in private equity investments.
NINE MONTHS ENDED SEPTEMBER 30,
2021
We posted sales of $27.1 billion for the nine
months ended September 30, 2021, an increase of 23% over the nine
months ended September 30, 2020. This compares to global light
vehicle production which increased 16% in the first nine months of
2021 compared to the first nine months of 2020, including increases
of 13% in each of North America, Europe and China.
During the nine months ended September 30, 2021,
income from operations before income taxes was $1.4 billion, net
income attributable to Magna International Inc. was $1.1 billion
and diluted earnings per share was $3.46, compared to $33 million,
$19 million and $0.06, respectively, in the first nine months of
2020.
During the nine months ended September 30, 2021,
Adjusted EBIT increased to $1.6 billion and adjusted diluted
earnings per share increased to $3.83.
During the nine months ended September 30, 2021,
we generated cash from operations before changes in operating
assets and liabilities of $2.3 billion and invested $691 million in
operating assets and liabilities. Investment activities for the
first nine months of 2021 included $823 million in fixed asset
additions, $298 million in investments, other assets and intangible
assets, $436 million in acquisitions/business combinations and $23
million in public and private equity investments.
RETURN OF CAPITAL TO SHAREHOLDERS
During the three months ended September 30,
2021, we paid dividends of $130 million.
Our Board of Directors declared a third quarter
dividend of $0.43 per Common Share, payable on December 3, 2021 to
shareholders of record as of the close of business on November 19,
2021.
MANAGEMENT CHANGES
Our Board of Directors has approved the
following management changes, all effective January 1,
2022:
- Vincent J. Galifi, our current
Executive Vice-President and Chief Financial Officer has been
appointed as President. In this role, Vince will support Magna’s
Chief Executive Officer, Swamy Kotagiri, on corporate strategy,
capital markets, stakeholder relations and other
matters.
- Patrick W.D. McCann has been
promoted to Executive Vice-President and Chief Financial Officer,
reporting to our Chief Executive Officer. In his 22+ year career at
Magna, Pat has served in a variety of senior finance roles at
Magna’s Head Office, including most recently as Senior
Vice-President, Finance. Pat also served as Vice-President, Finance
for Magna’s largest operating unit, Cosma International, between
2016 and 2019.
- Anton Mayer has been promoted to
Executive Vice-President and Chief Technology Officer, from his
current role as Executive Vice-President, Research &
Development. Anton also recently served as Executive
Vice-President, Systems & Portfolio Strategy and has held
various other roles in a 35+ year career at Magna.
OTHER MATTERS
Subject to approval by the Toronto Stock
Exchange and New York Stock Exchange, our Board of Directors
approved a new Normal Course Issuer Bid (“NCIB”) to purchase up to
29.9 million of our Common Shares, representing approximately 10%
of our public float of Common Shares. This NCIB is expected to
commence on or about November 15, 2021 and will terminate one year
later.
A photo accompanying this announcement is available
athttps://www.globenewswire.com/NewsRoom/AttachmentNg/af74df36-0125-4881-8444-4f2bfe96ea23
SEGMENT SUMMARY
($Millions unless
otherwise noted) |
For the three months ended September 30, |
Sales |
|
Adjusted EBIT |
|
|
2021 |
|
|
2020 |
|
|
Change |
|
|
|
2021 |
|
2020 |
|
Change |
|
Body Exteriors & Structures |
$ |
3,185 |
|
$ |
3,858 |
|
$ |
(673 |
) |
|
$ |
98 |
$ |
390 |
$ |
(292 |
) |
Power & Vision |
|
2,501 |
|
|
2,722 |
|
|
(221 |
) |
|
|
67 |
|
227 |
|
(160 |
) |
Seating Systems |
|
1,123 |
|
|
1,280 |
|
|
(157 |
) |
|
|
22 |
|
66 |
|
(44 |
) |
Complete Vehicles |
|
1,255 |
|
|
1,402 |
|
|
(147 |
) |
|
|
30 |
|
70 |
|
(40 |
) |
Corporate and Other |
|
(145 |
) |
|
(133 |
) |
|
(12 |
) |
|
|
12 |
|
25 |
|
(13 |
) |
Total Reportable Segments |
$ |
7,919 |
|
$ |
9,129 |
|
$ |
(1,210 |
) |
|
$ |
229 |
$ |
778 |
$ |
(549 |
) |
|
For the three months ended September 30, |
|
|
Adjusted EBIT as a percentage of
sales |
|
|
|
|
|
|
2021 |
|
|
2020 |
|
Change |
Body Exteriors & Structures |
|
|
|
|
|
3.1 |
% |
|
10.1 |
% |
|
(7.0 |
)% |
Power & Vision |
|
|
|
|
|
2.7 |
% |
|
8.3 |
% |
|
(5.6 |
)% |
Seating Systems |
|
|
|
|
|
2.0 |
% |
|
5.2 |
% |
|
(3.2 |
)% |
Complete Vehicles |
|
|
|
|
|
2.4 |
% |
|
5.0 |
% |
|
(2.6 |
)% |
Consolidated Average |
|
|
|
|
|
2.9 |
% |
|
8.5 |
% |
|
(5.6 |
)% |
|
|
($Millions unless
otherwise noted) |
For the nine months ended September 30, |
Sales |
|
Adjusted EBIT |
|
|
2021 |
|
|
2020 |
|
Change |
|
|
2021 |
|
|
2020 |
|
Change |
Body Exteriors & Structures |
$ |
10,857 |
|
$ |
9,157 |
|
$ |
1,700 |
|
|
$ |
652 |
|
$ |
274 |
|
$ |
378 |
|
Power & Vision |
|
8,538 |
|
|
6,543 |
|
|
1,995 |
|
|
|
567 |
|
|
136 |
|
|
431 |
|
Seating Systems |
|
3,592 |
|
|
3,065 |
|
|
527 |
|
|
|
103 |
|
|
22 |
|
|
81 |
|
Complete Vehicles |
|
4,595 |
|
|
3,656 |
|
|
939 |
|
|
|
189 |
|
|
164 |
|
|
25 |
|
Corporate and Other |
|
(450 |
) |
|
(342 |
) |
|
(108 |
) |
|
|
45 |
|
|
(15 |
) |
|
60 |
|
Total Reportable Segments |
$ |
27,132 |
|
$ |
22,079 |
|
$ |
5,053 |
|
|
$ |
1,556 |
|
$ |
581 |
|
$ |
975 |
|
|
For the nine months ended September 30, |
|
|
Adjusted EBIT as a percentage of
sales |
|
|
|
|
|
2021 |
2020 |
Change |
Body Exteriors & Structures |
|
|
|
|
6.0 |
% |
3.0 |
% |
3.0 |
% |
Power & Vision |
|
|
|
|
6.6 |
% |
2.1 |
% |
4.5 |
% |
Seating Systems |
|
|
|
|
2.9 |
% |
0.7 |
% |
2.2 |
% |
Complete Vehicles |
|
|
|
|
4.1 |
% |
4.5 |
% |
(0.4 |
)% |
|
|
|
|
|
|
|
|
Consolidated Average |
|
|
|
|
5.7 |
% |
2.6 |
% |
3.1 |
% |
|
For further details on our segment results,
please see our Management’s Discussion and Analysis of Results of
Operations and Financial Position and our Interim Financial
Statements.
2021 OUTLOOK
We first disclose a full-year Outlook annually
in February, with quarterly updates. The following Outlook is an
update to our previous Outlook in August 2021 and also reflects the
updated outlook for Light Vehicle Production, Total Sales and
Adjusted EBIT Margin in our press release dated October 20,
2021.
Updated 2021 Outlook
Assumptions
|
|
|
Current |
|
Previous |
Light Vehicle
Production (millions of
units) North
America Europe China |
13.416.523.0 |
|
14.418.124.7 |
|
|
|
|
|
|
Average Foreign exchange rates:1
Canadian dollar equals1 euro equals |
|
|
U.S. $0.800U.S. $1.187 |
|
U.S. $0.801U.S. $1.193 |
Updated 2021 Outlook
|
|
|
Current |
|
Previous |
Segment
Sales Body Exteriors
& Structures
Power &
Vision Seating Systems
Complete
Vehicles |
|
|
$14.1 - $14.5 billion$11.2 - $11.5 billion$4.6 - $4.8 billion$6.0 -
$6.2 billion |
|
$15.3 - $15.9 billion$11.8 - $12.2 billion$5.1 - $5.4 billion$6.3 -
$6.6 billion |
Total Sales |
|
|
$35.4 - $36.4 billion |
|
$38.0 - $39.5 billion |
|
|
|
|
|
|
Adjusted EBIT Margin(3) |
|
|
5.1% - 5.4% |
|
7.0% - 7.4% |
|
|
|
|
|
|
Equity Income (included in
EBIT) |
|
|
$120 - $145 million |
|
$115 - $145 million |
|
|
|
|
|
|
Interest Expense, net |
|
|
Approximately $80 million |
|
Approximately $80 million |
|
|
|
|
|
|
Income Tax Rate(4) |
|
|
Approximately 21% |
|
Approximately 23% |
|
|
|
|
|
|
Net Income attributable to
Magna(5) |
|
|
$1.35 - $1.45 billion |
|
$2.0 - $2.2 billion |
|
|
|
|
|
|
Capital Spending |
|
|
Approximately $1.5 billion |
|
Approximately $1.6 billion |
|
|
|
|
|
|
Notes:(3) Adjusted EBIT Margin is the ratio of Adjusted EBIT to
Total Sales(4) The Income Tax Rate has been calculated using
Adjusted EBIT and is based on current tax legislation(5) Net Income
attributable to Magna represents Net Income excluding Other expense
(income), net |
Our Outlook is intended to provide information
about management’s current expectations and plans and may not be
appropriate for other purposes. Although considered reasonable by
Magna as of the date of this document, the 2021 Outlook above and
the underlying assumptions may prove to be inaccurate. Accordingly,
our actual results could differ materially from our expectations as
set forth herein. The risks identified in the “Forward-Looking
Statements” section below represent the primary factors which we
believe could cause actual results to differ materially from our
expectations.
Key Drivers of Our Business
Our operating results are primarily dependent on
the levels of North American, European and Chinese car and light
truck production by our customers. While we supply systems and
components to every major original equipment manufacturer (“OEM”),
we do not supply systems and components for every vehicle, nor is
the value of our content consistent from one vehicle to the next.
As a result, customer and program mix relative to market trends, as
well as the value of our content on specific vehicle production
programs, are also important drivers of our results.
OEM production volumes are generally aligned
with vehicle sales levels and thus affected by changes in such
levels. Aside from vehicle sales levels, production volumes are
typically impacted by a range of factors, including: general
economic and political conditions; labour disruptions; free trade
arrangements; tariffs; relative currency values; commodities
prices; supply chains; infrastructure; availability and relative
cost of skilled labour; regulatory considerations, including those
related to environmental emissions and safety standards; and other
factors. Additionally, COVID-19 can impact vehicle production
volumes, including through: mandatory stay-at-home orders which
restrict production; elevated employee absenteeism; and supply
chain disruptions.
Overall vehicle sales levels are significantly
affected by changes in consumer confidence levels, which may in
turn be impacted by consumer perceptions and general trends related
to the job, housing and stock markets, as well as other
macroeconomic and political factors. Other factors which typically
impact vehicle sales levels and thus production volumes include:
interest rates and/or availability of credit; fuel and energy
prices; relative currency values; regulatory restrictions on use of
vehicles in certain megacities; and other factors. Additionally,
COVID-19 can impact vehicle sales, including through mandatory
stay-at-home orders which restrict operations of car dealerships,
as well as through deterioration in consumer
confidence.NON-GAAP FINANCIAL MEASURES
RECONCILIATION
Adjusted EBIT |
|
The following table reconciles net income to Adjusted EBIT: |
|
|
|
For the three months ended September
30, |
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
Net income |
$ |
17 |
|
|
$ |
327 |
|
Add: |
|
|
|
Interest expense, net |
|
22 |
|
|
|
26 |
|
Other expense, net |
|
180 |
|
|
|
316 |
|
Income taxes |
|
10 |
|
|
|
109 |
|
Adjusted EBIT |
$ |
229 |
|
|
$ |
778 |
|
|
|
|
|
|
|
|
|
Adjusted EBIT as a percentage of sales (“Adjusted EBIT
margin”) |
|
|
|
|
|
|
Adjusted EBIT as a percentage of sales is calculated in the table
below: |
|
|
|
For the three months ended September
30, |
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
Sales |
$ |
7,919 |
|
|
$ |
9,129 |
|
Adjusted EBIT |
$ |
229 |
|
|
$ |
778 |
|
Adjusted EBIT as a percentage of sales |
|
2.9 |
% |
|
|
8.5 |
% |
|
|
|
|
|
|
|
|
Adjusted diluted earnings per share |
|
|
|
|
|
|
|
The following table reconciles net income attributable to Magna
International Inc. to Adjusted diluted earnings per share: |
|
|
|
For the three months ended September
30, |
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
Net income attributable to Magna International Inc. |
$ |
11 |
|
|
$ |
405 |
|
Add (deduct): |
|
|
|
Other expense, net |
|
180 |
|
|
|
316 |
|
Tax effect on Other expense, net |
|
(21 |
) |
|
|
(61 |
) |
Loss attributable to non-controlling interests related |
|
|
|
to Other expense, net |
|
- |
|
|
|
(75 |
) |
Adjusted net income attributable to Magna International Inc. |
$ |
170 |
|
|
$ |
585 |
|
Diluted weighted average number of Common Shares outstanding during
the period (millions): |
|
302.6 |
|
|
|
299.4 |
|
Adjusted diluted earnings per share |
$ |
0.56 |
|
|
$ |
1.95 |
|
NON-GAAP FINANCIAL MEASURES
RECONCILIATION
Adjusted EBIT |
|
The following table reconciles net income to Adjusted EBIT: |
|
|
|
For the nine months ended September
30, |
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
Net income (loss) |
$ |
1,075 |
|
|
$ |
(73 |
) |
Add: |
|
|
|
Interest expense, net |
|
56 |
|
|
|
64 |
|
Other expense, net |
|
128 |
|
|
|
484 |
|
Income taxes |
|
297 |
|
|
|
106 |
|
Adjusted EBIT |
$ |
1,556 |
|
|
$ |
581 |
|
|
|
|
|
|
|
|
|
Adjusted EBIT as a percentage of sales (“Adjusted EBIT
margin”) |
|
|
|
|
|
|
Adjusted EBIT as a percentage of sales is calculated in the table
below: |
|
|
|
For the nine months ended September
30, |
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
Sales |
$ |
27,132 |
|
|
$ |
22,079 |
|
Adjusted EBIT |
$ |
1,556 |
|
|
$ |
581 |
|
Adjusted EBIT as a percentage of sales |
|
5.7 |
% |
|
|
2.6 |
% |
|
|
|
|
|
|
|
|
Adjusted diluted earnings per share |
|
|
|
|
|
|
|
The following table reconciles net income attributable to Magna
International Inc. to Adjusted diluted earnings per share: |
|
|
|
For the nine months ended September
30, |
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
Net income attributable to Magna International Inc. |
$ |
1,050 |
|
|
$ |
19 |
|
Add (deduct): |
|
|
|
Other expense, net |
|
128 |
|
|
|
484 |
|
Tax effect on Other expense, net |
|
(16 |
) |
|
|
(93 |
) |
Loss attributable to non-controlling interests related |
|
|
|
to Other expense, net |
|
- |
|
|
|
(75 |
) |
Adjusted net income attributable to Magna International Inc. |
$ |
1,162 |
|
|
$ |
335 |
|
Diluted weighted average number of Common Shares outstanding during
the period (millions): |
|
303.2 |
|
|
|
300.2 |
|
Adjusted diluted earnings per share |
$ |
3.83 |
|
|
$ |
1.12 |
|
Certain of the forward-looking financial
measures above are provided on a Non-GAAP basis. We do not provide
a reconciliation of such forward-looking measures to the most
directly comparable financial measures calculated and presented in
accordance with U.S. GAAP. To do so would be potentially misleading
and not practical given the difficulty of projecting items that are
not reflective of on-going operations in any future period. The
magnitude of these items, however, may be significant.
This press release together with our
Management’s Discussion and Analysis of Results of Operations and
Financial Position and our Interim Financial Statements are
available in the Investor Relations section of our website at
www.magna.com/company/investors and filed electronically through
the System for Electronic Document Analysis and Retrieval (SEDAR)
which can be accessed at www.sedar.com as well as on the United
States Securities and Exchange Commission’s Electronic Data
Gathering, Analysis and Retrieval System (EDGAR), which can be
accessed at www.sec.gov.
We will hold a conference call for interested
analysts and shareholders to discuss our third quarter ended
September 30, 2021 results on Friday, November 5, 2021 at 8:00 a.m.
ET. The conference call will be chaired by Swamy Kotagiri, Chief
Executive Officer. The number to use for this call from North
America is 1-800-926-9175. International callers should use
1-416-641-6701. Please call in at least 10 minutes prior to the
call start time. We will also webcast the conference call at
www.magna.com. The slide presentation accompanying the conference
call as well as our financial review summary will be available on
our website Friday prior to the call.
TAGSQuarterly earnings, financial results,
vehicle production
INVESTOR CONTACTLouis Tonelli, Vice-President,
Investor Relations louis.tonelli@magna.com │ 905.726.7035
MEDIA CONTACT Tracy Fuerst, Vice-President,
Corporate Communications & PR tracy.fuerst@magna.com │
248.761.7004
TELECONFERENCE CONTACTNancy Hansford, Executive Assistant,
Investor Relations nancy.hansford@magna.com │ 905.726.7108
OUR BUSINESS(6)Magna 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 154,000 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 90 product
development, engineering and sales centres spanning 28
countries.
For further information about Magna (NYSE:MGA; TSX:MG), please
visit www.magna.com or follow us on Twitter
@MagnaInt.
(6) Manufacturing operations, product development, engineering
and sales centres and employee figures include certain
equity-accounted operations.
FORWARD-LOOKING STATEMENTS
Certain 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 SalesSegment Sales |
- Economic impact of COVID-19 on
consumer confidence
- Supply disruptions, including as a
result of a semiconductor chip shortage currently being experienced
in the industry
- Global energy shortages
- Elevated level of inflation
- 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 MarginNet Income Attributable to Magna |
- Same risks as for Total Sales and
Segment 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; other unrecoverable costs; and price
increases from sub-suppliers that have been negatively impacted by
production inefficiencies
- Price concessions
- Commodity cost volatility
- Higher labour costs
- Tax risks
|
Equity Income |
- Same risks as Adjusted EBIT Margin
and Net Income Attributable to Magna
- Risks related to conducting
business through joint ventures
|
Free Cash Flow |
- Same risks as for Total
Sales/Segment Sales, and Adjusted EBIT Margin and Net Income
Attributable to Magna above
|
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, the semiconductor shortage, and energy
shortages, including in China;
- 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,
including risks related to limited revenues/operating history of
new OEM entrants;
- 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 following time of quote;
- 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 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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