Magna Earnings: Healthy Revenue Growth, but Despite Margin Contraction, Guidance Tweaked Higher

No-moat-rated Magna reported first-quarter earnings per share before special items of $1.11, $0.24 better than the FactSet consensus estimate of $0.87 but $0.17 below the $1.28 result reported last year. Despite less chip crunch impact, the shortfall was attributable to headwinds including continued but improving chip-related production shutdowns, higher warranty accrual, operational problems in a European facility, higher launch costs, and inflationary cost pressures. Revenue rose 11% to $10.7 billion from $9.6 billion in the prior year as customer call-offs continued but lessened and due to new business backlog. The top line beat consensus by 7%. Organic revenue increased 15%, outperforming a 7% increase in global production, weighted to Magna's customer base, by 8 percentage points.