shares of Magna International Inc. was down nearly 15 percent in late-night trading Friday as the company reported lower-than-expected financial results.
“2022 was another tough year for the automotive industry and for Magna,” said company chief executive officer Swami Kotagiri on the earnings call with analysts.
Supply disruptions that were expected to go away last year have not gone away, leading to volatility in auto production that has created significant inefficiencies in Magna’s operations, he said.
Kotagiri said last-minute production assembly stops for its automaker customers, poor performance at some facilities and higher warranty expenses contributed to the fourth-quarter margin contraction.
Magna International to acquire active security business of Vioneer for US$1.525 billion
Part of the Sun breaks apart and creates a strange vortex, scientists are amazed
“Unfortunately, we ended a difficult year with disappointing Q4 results relative to our expectations entering the quarter.”
The auto parts company, which keeps its books in US dollars, says it earned US$95 million, or 33 cents per share, in the quarter ended December 31, on its way to US$464 million, or US$1.5 billion, in the last three months of 2021. 1.54 per diluted share. ,
Sales totaled US$9.57 billion, up from US$9.11 billion a year earlier.
On an adjusted basis, Magna said it earned 91 cents per diluted share in the fourth quarter of 2022, down from an adjusted profit of US$1.30 per diluted share in the same quarter a year ago.
Analysts on average had expected a profit of US$1.02 per share, according to estimates compiled by financial market data firm Refinitiv.
The company’s margin on earnings before interest and taxes fell to 3.7 percent in the fourth quarter, while in November it cut its margin estimates to between 4.8 percent and five percent for the year. Lower margins led to free cash flow that was also below its outlook.
The results helped drive the company’s share price down to $12.85, or 14.8 percent, in mid-morning trading on the Toronto Stock Exchange.
Looking ahead, Magna doesn’t expect a quick recovery as margins for 2023 are expected to be in a broad range between 4.1 percent and 5.1 percent, compared to 5.6 percent in the fourth quarter of 2021.
The company expects major improvements with margins between 6.7 and 7.8 percent by 2025, when volatility and other pressures on production are expected to ease.
“We are hopeful that the market will stabilize,” Kotagiri said.
© 2023 The Canadian Press