Magna International Shares Rise 4.2% on 1Q Profit, Earnings Beat, Improved Outlook

By Adriano Marchese

Magna International Inc. shares were higher Friday morning after the company reported better-than-expected revenue and profit in the first quarter, as well as improved production in Europe and North America.

At 10:47 a.m. ET, shares trading in Toronto were 4.2% higher at 70.83 Canadian dollars ($52.32).

Early Friday, the Canadian auto-parts manufacturer reported a decrease in profit to $209 million, or 73 cents a share, from $364 million, or 1.22 a share a year earlier.

Magna said that the decline was driven by higher expenses as well as adjustments to deferred tax valuation allowances.

Adjusted earnings also fell, reaching $1.11 a share compared with $1.28 a share the prior year.

Analysts expected the decline, but anticipated adjusted earnings to fall more precipitously to 87 cents a share.

Revenue surprised analysts as well, rising to $10.67 billion from $9.64. Analysts didn't expect Magna to breach the $10-billion mark this quarter, anticipating a slighter rise to $9.83 billion.

The higher revenue was driven by higher assembly volumes and better production in its two largest markets of North America and Europe, which increased by 8% and 7%, respectively.

For the year, the company also sees production in those regions rising, expecting to produce 15 million units in North America and 16.3 million in Europe, up from a previous expectation of 14.9 million and 16.2 million units, respectively.

This is expected to bring total sales up to a new range of between $40.2 million and $41.8 billion, up from previous guidance of $39.6 billion to $41.2 billion.

It has also tightened its expectation for adjusted earnings before interest and taxes margin to be between 4.7% and 5.1%. It had previously set an expectation of between 4.1% and 5.1%, which should support a net income of between $1.3 billion and $1.5 billion, up from $1.1 billion and $1.4 billion.

Write to Adriano Marchese at adriano.marchese@wsj.com

(END) Dow Jones Newswires

May 05, 2023 11:15 ET (15:15 GMT)

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