Magna studies $156 million Q2 loss on affect of Russia-Ukraine struggle, larger prices
Magna International Inc. reported a $156 million web loss within the second quarter because the diversified Canadian auto provider grappled with larger commodities and power prices and the affect of the Russian invasion of Ukraine.
The net loss compares with second-quarter 2021 earnings of $424 million and comes regardless of a 3.6 p.c year-over-year achieve in gross sales to $9.36 billion.
The loss for the quarter ended June 30 features a one-time impairment cost of $376 million associated to Magna’s operations in Russia, which stay considerably idled due to the war. Magna operates six plants in the country that make use of 2,500 folks.
Adjusted earnings earlier than curiosity, taxes and different bills got here in at $358 million, Magna mentioned, in contrast with $557 million in adjusted web earnings within the second quarter of 2021.
“Persevering with challenges have impacted our Q2 earnings,” Magna CEO Swamy Kotagiri mentioned in a Friday convention name with analysts. “Nonetheless, outcomes have been in step with our inside expectations.”
Larger commodities prices and different inflationary elements have led to “elevated” enter prices which have dragged down the corporate’s margins. Kotagiri mentioned the corporate is “extremely targeted” on recovering these elevated prices and continues to have discussions with automakers to regulate pricing.
As with a lot of the trade, Magna’s second-quarter outcomes have been additionally hit by the microchip shortage and COVID-19 lockdowns in China, which decreased demand for autos on this planet’s largest auto market.
Kotagiri mentioned he anticipated these constraints to ease within the second half of the yr relative to the primary as the worldwide provide of semiconductors improves and because the Chinese language authorities implements financial stimulus.
Gross sales inside Magna’s physique exteriors and buildings unit rose 8 p.c to $3.9 billion partly due to elevated international car manufacturing and the launch of latest packages.
Likewise, seating unit gross sales rose 7 p.c from a yr earlier to $1.3 billion. Income from the ability and imaginative and prescient unit have been flat at $2.9 billion.
Magna’s full car meeting enterprise noticed gross sales income decline 6 p.c to $1.4 billion largely due to the euro weakening towards the greenback. It produced 1,500 extra autos for automakers than it did a yr earlier.
Adjusted earnings earlier than curiosity and taxes fell throughout all enterprise items in contrast with the second quarter of 2021.
Magna modestly elevated its annual gross sales outlook, anticipating income of $37.6 billion to $39.2 billion for the yr, up about $300 million in contrast with its earlier estimate. Its annual web earnings forecast remained unchanged, at $1.3 billion to $1.5 billion.
Kotagiri mentioned low vendor stock ranges and resilient demand for brand spanking new autos ought to assist to maintain the auto market afloat, even because the trade continues to cope with provide chain challenges and rising rates of interest.
As international financial situations evolve, Magna stays open to acquisitions within the second half of the yr, Kotagiri mentioned.
“There is perhaps alternatives that come alongside, and we’re very attentive,” he mentioned. “We’ll have our ear to the bottom slightly bit extra.”
Magna shares fell 0.1 p.c to $63.73 in afternoon buying and selling on Friday.
Magna ranks No. 4 on the Automotive News list of the top 100 global suppliers, with worldwide components gross sales to automakers of $36.2 billion in 2021.
Reuters contributed to this report.