Magna Announces Third Quarter and Year to Date ResultsBy Magna International Inc., PRNE
Wednesday, November 2, 2011
AURORA, Ontario, November 3, 2011 -
Magna International Inc. (TSX: MG) (NYSE: MGA) today reported financial results for the third quarter ended September 30, 2011.
On January 1, 2011, we adopted United States generally accepted accounting principles (”GAAP”) as our primary basis of accounting. All financial information in this press release has been revised to reflect our results as if they had been historically reported in accordance with U.S. GAAP.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2011 2010 2011 2010 Sales $6,970 $5,778 $21,497 $17,026 Operating income $ 164 $ 328 $ 926 $ 973 Net income attributable to Magna International Inc. $ 102 $ 266 $ 706 $ 784 Diluted earnings per share $ 0.42 $ 1.14 $ 2.89 $ 3.43 All results are reported in millions of U.S. dollars, except per share figures, which are in U.S. dollars.
THREE MONTHS ENDED SEPTEMBER 30, 2011
We posted sales of $7.0 billion for the third quarter ended September 30, 2011, an increase of 21% from the third quarter of 2010. We achieved this sales increase in a period when vehicle production increased 4% in Western Europe and 8% in North America, both relative to the third quarter of 2010. Our North American, European and Rest of World production sales, complete vehicle assembly sales and tooling, engineering and other sales all increased in the third quarter of 2011 relative to the comparable quarter in 2010.
Complete vehicle assembly sales increased 28% to $663 million for the third quarter of 2011 compared to $519 million for the third quarter of 2010, while complete vehicle assembly volumes increased 55% to approximately 32,000 units.
During the third quarter of 2011, operating income was $164 million, net income attributable to Magna International Inc. was $102 million and diluted earnings per share were $0.42, decreases of $164 million, $164 million and $0.72, respectively, each compared to the third quarter of 2010. During the third quarter of 2011, we recorded other expense relating to the disposal of a non-strategic interior systems operation and the cost of entering into an agreement pertaining to the settlement of certain claims. These items negatively impacted operating income and net income by $124 million and diluted earnings per share by $0.52.
During the third quarter ended September 30, 2011, we generated cash from operations of $393 million before changes in non-cash operating assets and liabilities, and invested $148 million in non-cash operating assets and liabilities. Total investment activities for the third quarter of 2011 were $383 million, including $338 million in fixed asset additions, $40 million in investments and other assets, and $5 million to purchase subsidiaries.
NINE MONTHS ENDED SEPTEMBER 30, 2011
We posted sales of $21.5 billion for the nine months ended September 30, 2011, an increase of 26% from the nine months ended September 30, 2010. This higher sales level was a result of increases in our North American, European and Rest of World production sales, complete vehicle assembly sales and tooling, engineering and other sales.
During the nine months ended September 30, 2011, vehicle production increased 8% to 9.7 million units in North America and 5% to 10.3 million units in Western Europe, each compared to the first nine months of 2010.
Complete vehicle assembly sales increased 33% to $2.1 billion for the nine months ended September 30, 2011 compared to $1.6 billion for the nine months ended September 30, 2010, while complete vehicle assembly volumes increased 65% to approximately 100,000 units.
During the nine months ended September 30, 2011, operating income was $926 million, net income attributable to Magna International Inc. was $706 million and diluted earnings per share were $2.89, decreases of $47 million, $78 million and $0.54, respectively, each compared to the first nine months of 2010. During the nine months ended September 30, 2011, we recorded other expense relating to the disposal of a non-strategic interior systems operation, the cost of entering into an agreement pertaining to the settlement of certain claims, the write down of real estate, and a gain on disposal of an equity accounted investment. These items negatively impacted operating income and net income by $123 million and diluted earnings per share by $0.50.
During the nine months ended September 30, 2011, we generated cash from operations before changes in non-cash operating assets and liabilities of $1.4 billion, and invested $926 million in non-cash operating assets and liabilities. Total investment activities for the first nine months of 2011 were $867 million, including $708 million in fixed asset additions, $140 million in investments and other assets and $19 million to purchase subsidiaries.
A more detailed discussion of our consolidated financial results for the third quarter and nine months ended September 30, 2011 is contained in the Management’s Discussion and Analysis of Results of Operations and Financial Position and the unaudited interim consolidated financial statements and notes thereto, which are attached to this Press Release.
Today, our Board of Directors declared a quarterly dividend of $0.25 with respect to our outstanding Common Shares for the quarter ended September 30, 2011. This dividend is payable on December 15, 2011 to shareholders of record on November 30, 2011.
Subject to approval by the Toronto Stock Exchange and the New York Stock Exchange, our Board of Directors approved a normal course issuer bid to purchase up to 12.0 million of our Common Shares. This new normal course issuer bid is expected to commence on or about November 11, 2011 and will terminate one year later.
UPDATED 2011 OUTLOOK
Light Vehicle Production Units North America 12.9 million Western Europe 13.6 million $13.6 billion - $13.9 billion Production Sales $8.5 billion - $8.7 North America billion Europe $1.3 billion - $1.4 Rest of World billion $23.4 billion - $24.0 Total Production Sales billion $2.6 billion - $2.8 Complete Vehicle Assembly Sales billion $28.1 billion - $28.9 Total Sales billion Operating Margin* Approximately 4.75% Income Tax Rate* Approximately 22% $1.0 billion - $1.1 Capital Spending billion * Excluding other expenses/income (unusual items)
In this 2011 outlook, in addition to 2011 light vehicle production, we have assumed no material acquisitions or divestitures. In addition, we have assumed that foreign exchange rates for the most common currencies in which we conduct business relative to our U.S. dollar reporting currency will approximate current rates.
We are the most diversified global automotive supplier. We design, develop and manufacture technologically advanced automotive systems, assemblies, modules and components, and engineer and assemble complete vehicles, primarily for sale to original equipment manufacturers (”OEMs”) of cars and light trucks. Our capabilities include the design, engineering, testing and manufacture of automotive interior systems; seating systems; closure systems; body and chassis systems; vision systems; electronic systems; exterior systems; powertrain systems; roof systems; hybrid and electric vehicles/systems; as well as complete vehicle engineering and assembly.
We have approximately 107,000 employees in 275 manufacturing operations and 85 product development, engineering and sales centres in 26 countries.
We will hold a conference call for interested analysts and shareholders to discuss our third quarter results on Thursday, November 3, 2011 at 8:00 a.m. EDT. The conference call will be chaired by Don Walker, Chief Executive Officer. The number to use for this call is 1-800-909-4195. The number for overseas callers is 1-212-231-2931. Please call in at least 10 minutes prior to the call. We will also webcast the conference call at www.magna.com. The slide presentation accompanying the conference call will be available on our website Thursday morning prior to the call.
For further information, please contact Louis Tonelli, Vice-President, Investor Relations at 905-726-7035.
For teleconferencing questions, please contact Karin Kaminski at 905-726-7103.
The previous discussion contains statements that constitute “forward-looking statements” within the meaning of applicable securities legislation, including, but not limited to, statements relating to: Magna’s expected production sales, based on expected light vehicle production in North America and Western Europe; Magna’s expected production sales in the North America, Europe and Rest of World segments; complete vehicle assembly sales; consolidated operating margin; effective income tax rate; and fixed asset expenditures. The forward-looking information in this MD&A is presented for the purpose of providing information about management’s current expectations and plans and such information may not be appropriate for other purposes. Forward-looking statements may include financial and other projections, as well as statements regarding our future plans, objectives or economic performance, or the assumptions underlying any of the foregoing, and other statements that are not recitations of historical fact. We use words such as “may”, “would”, “could”, “should”, “will”, “likely”, “expect”, “anticipate”, “believe”, “intend”, “plan”, “forecast”, “outlook”, “project”, “estimate” and similar expressions suggesting future outcomes or events to identify forward-looking statements. Any such forward-looking statements are based on information currently available to us, and are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks, assumptions and uncertainties, many of which are beyond our control, and the effects of which can be difficult to predict, including, without limitation: the potential for a slower than anticipated economic growth or a deterioration of economic conditions; the impact of potential disruptions in the capital and credit markets; uncertainty with respect to the financial condition of a number of governments, particularly in Europe; production volume levels; the impact of the insolvency or bankruptcy of a critical supplier; the highly competitive nature of the automotive parts supply business; a reduction in outsourcing by our customers or the loss of a material production or assembly program; the termination or non-renewal by our customers of any material production purchase order; the inability of sub-suppliers to timely accommodate demand for their parts; a shift away from technologies in which we are investing; restructuring, downsizing and/or other significant non-recurring costs; impairment charges related to goodwill, long-lived assets and deferred tax assets; our ability to diversify our sales; shifts in market shares among vehicles or vehicle segments, or shifts away from vehicles on which we have significant content; our ability to shift our manufacturing footprint to take advantage of opportunities in growing markets; risks of conducting business in foreign countries, including China, India, Brazil, Russia and other growing markets; exposure to elevated commodities prices; fluctuations in relative currency values; our ability to successfully identify, complete and integrate acquisitions; pricing pressures, including our ability to offset price concessions demanded by our customers; warranty and recall costs; our ability to compete successfully in non-automotive businesses in which we pursue opportunities; changes in our mix of earnings between jurisdictions with lower tax rates and those with higher tax rates, as well as our ability to fully benefit tax losses; other potential tax exposures; legal claims and/or regulatory actions against us; work stoppages and labour relations disputes; changes in credit ratings assigned to us; changes in laws and governmental regulations; costs associated with compliance with environmental laws and regulations; the potential bankruptcy of a major automotive customer; our non-controlling interest in Magna E-Car Systems; our ability to recover our initial or any potential subsequent investment(s) in Magna E-Car Systems; risks related to the electric vehicle industry itself; and other factors set out in our Annual Information Form filed with securities commissions in Canada and our annual report on Form 40-F filed with the United States Securities and Exchange Commission, and subsequent filings. In evaluating forward-looking statements, we caution readers not to place undue reliance on any forward-looking statements and readers should specifically consider the various factors which could cause actual events or results to differ materially from those indicated by such forward-looking statements. Unless otherwise required by applicable securities laws, we do not intend, nor do we undertake any obligation, to update or revise any forward-looking statements to reflect subsequent information, events, results or circumstances or otherwise.
For further information about Magna, please see our website at www.magna.com. Copies of financial data and other publicly filed documents are available through the internet on the Canadian Securities Administrators’ System for Electronic Document Analysis and Retrieval (SEDAR) which can be accessed at www.sedar.com and on the United States Securities and Exchange Commission’s Electronic Data Gathering, Analysis and Retrieval System (EDGAR) which can be accessed at www.sec.gov
For further information:
Magna International Inc.
337 Magna Drive
Aurora, Ontario l4G 7K1
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