Magna Earnings: Management Raises Guidance on Second-Quarter Results and Veoneer Acquisition

No-moat-rated Magna reported second-quarter earnings per share before special items of $1.50, beating the $1.23 FactSet consensus by $0.27 and up $0.67 from the $0.83 result reported last year. Higher customer volumes on less chip crunch impact and better throughput were partially offset by higher launch costs, increased engineering spending, and continued industry headwinds including the chip shortage, logistics disruption, inflationary cost pressures, rising interest rates, and possible recession in major auto markets. Revenue jumped 17% to $11.0 billion, up from $9.4 billion in the prior year on customer volume, new business backlog, the Veoneer acquisition, and customer cost recoveries. The top line beat consensus by 5%. Organic revenue also increased 17%, outperforming a 14% increase in global production, weighted to Magna's customer base, by 3 percentage points.