Magna Announces First Quarter Results
AURORA, Ontario, May 7, 2015 /PRNewswire/ --
Magna International Inc. (TSX: MG; NYSE: MGA) today reported financial results for the first quarter ended March 31, 2015.
THREE MONTHS ENDED
March 31, 2015 March 31, 2014
Sales $ 8,330 $ 8,961
Adjusted EBIT(1) $ 642 $ 605
Income from operations before income taxes $ 631 $ 581
Net income attributable to Magna International Inc. $ 465 $ 393
Diluted earnings per share $ 1.12 $ 0.88
All results are reported in millions of U.S. dollars, except per share
figures, which are in U.S. dollars.
(1) Adjusted EBIT is the measure of segment profit or loss as reported in the
Company's attached unaudited interim consolidated financial statements.
Adjusted EBIT represents income from operations before income taxes; interest
expense, net; and other expense, net.
THREE MONTHS ENDED MARCH 31, 2015
We posted sales of $8.33 billion for the first quarter ended March 31, 2015, a decrease of $631 million or 7% from the first quarter of 2014. The weakening of certain currencies against our U.S. dollar reporting currency, in particular the euro and Canadian dollar, had a significant negative impact on our reported sales for the first quarter of 2015. Foreign currency translation reduced our sales by approximately $880 million, as compared to the first quarter of 2014. Excluding the impact of foreign currency translation, our sales increased 3% in the first quarter of 2015, compared to the first quarter of 2014. North American and European light vehicle production each declined marginally in the first quarter of 2015, compared to the first quarter of 2014.
Complete vehicle assembly sales decreased 28% to $584 million for the first quarter of 2015 compared to $813 million for the first quarter of 2014, of which foreign currency translation accounted for $127 million of the decrease. Complete vehicle assembly volumes decreased 23% to approximately 27,000 units in the first quarter of 2015 compared to the first quarter of 2014.
During the first quarter of 2015, income from operations before income taxes was $631 million, net income attributable to Magna International Inc. was $465 million and diluted earnings per share were $1.12, increases of $50 million, $72 million and $0.24, respectively, each compared to the first quarter of 2014.
Excluding other expense, after tax and the impact of the Austrian tax reform, each in the first quarter of 2014, income from operations before income taxes, net income attributable to Magna International Inc. and diluted earnings per share for the first quarter of 2015 increased $28 million, $20 million and $0.12 respectively, each compared to the first quarter of 2014.
During the first quarter ended March 31, 2015, we generated cash from operations of $652 million before changes in non-cash operating assets and liabilities, and invested $358 million in operating assets and liabilities. Total investment activities for the first quarter of 2015 were $323 million, including $280 million in fixed asset additions, $42 million in investments and other assets and $1 million to purchase subsidiaries.
Don Walker, Magna's Chief Executive Officer commented: "We posted improved earnings and return on funds employed in the first quarter of 2015, as well as excellent cash flow generation. While the strengthened U.S. dollar negatively impacted our reported sales and earnings, our underlying operations performed well in the quarter.
We have been refining our product portfolio to focus on certain key areas of the vehicle, reflected in our agreements this year to sell substantially all of our interiors operations, our battery pack business, as well as our sale last year of certain non-core composites operations. At the same time, we have been taking steps to expand in other areas such as metalforming, where we recently announced a joint venture in China."
A more detailed discussion of our consolidated financial results for the first quarter ended March 31, 2015 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.
DIVIDENDS
Yesterday, our Board of Directors declared a quarterly dividend of $0.22 with respect to our outstanding Common Shares for the quarter ended March 31, 2015. This dividend is payable on June 12, 2015 to shareholders of record on May 29, 2015.
UPDATED 2015 OUTLOOK
Our updated 2015 outlook below excludes full year 2015 financial information for the interiors operations we intend to sell, pursuant to our agreement with Grupo Antolin announced on April 16, 2015. This will be consistent with disclosure of the business as discontinued operations beginning with the reporting of our financial results for the second quarter ended June 30, 2015.
Light Vehicle Production (Units)
North America 17.4 million
Europe 20.2 million
Production Sales $17.2 billion - $17.8 billion
North America $6.9 billion - $7.3 billion
Europe $1.7 billion - $1.9 billion
Asia $0.6 billion - $0.7 billion
Rest of World
Total Production Sales $26.4 billion - $27.7 billion
Complete Vehicle Assembly Sales $2.1 billion - $2.4 billion
Total Sales $30.8 billion - $32.5 billion
Operating Margin(1) High 7% range
Tax Rate(1) Approximately 26%
Capital Spending $1.3 billion - $1.5 billion
(1) Excluding other expense, net
In this 2015 outlook, in addition to 2015 light vehicle production, we have assumed no material acquisitions or divestitures other than the interiors divestiture noted above. 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.
ABOUT MAGNA
We are a leading global automotive supplier with 316 manufacturing operations and 87 product development, engineering and sales centres in 29 countries. We have approximately 133,000 employees focused on delivering superior value to our customers through innovative products and processes, and World Class Manufacturing. Our product capabilities include producing body, chassis, interior, exterior, seating, powertrain, electronic, vision, closure and roof systems and modules, as well as complete vehicle engineering and contract manufacturing. Our Common Shares trade on the Toronto Stock Exchange (MG) and the New York Stock Exchange (MGA). For further information about Magna, visit our website at http://www.magna.com.
We will hold a conference call for interested analysts and shareholders to discuss our first quarter results on Thursday, May 7, 2015 at 2:00 p.m. EDT. The conference call will be chaired by Don Walker, Chief Executive Officer. The number to use for this call is 1-800-735-5968. The number for overseas callers is 1-416-620-9188. Please call in at least 10 minutes prior to the call. We will also webcast the conference call at http://www.magna.com. The slide presentation accompanying the conference call will be available on our website Thursday afternoon prior to the call.
FORWARD-LOOKING STATEMENTS
This press release contains statements that constitute "forward-looking statements" or "forward-looking information" within the meaning of applicable securities legislation, including, but not limited to, statements relating to: Magna's forecasts of light vehicle production in North America and Europe; expected consolidated sales, based on such light vehicle production volumes; production sales, including expected split by segment, in its North America, Europe, Asia and Rest of World segments for 2015; complete vehicle assembly sales; consolidated operating margin, effective income tax rate; fixed asset expenditures; and statements relating to the refinement of our product portfolio through acquisitions, divestitures, joint ventures or otherwise, including the strategic benefits expected to result from the sale of substantially all of our Interiors operations (the "Transaction") . The forward-looking information in this document 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 impact of economic or political conditions on consumer confidence, consumer demand for vehicles and vehicle production; fluctuations in relative currency values; restructuring, downsizing and/or other significant non-recurring costs; continued underperformance of one or more of our operating Divisions; ongoing pricing pressures, including our ability to offset price concessions demanded by our customers; our ability to successfully launch material new or takeover business; shifts in market share away from our top customers; inability to grow our business with OEMs; shifts in market shares among vehicles or vehicle segments, or shifts away from vehicles on which we have significant content; risks of conducting business in foreign markets, including China, India, Russia, Eastern Europe, Thailand, Brazil, Argentina and other non-traditional markets for us; a prolonged disruption in the supply of components to us from our suppliers; shutdown of our or our customers' or sub-suppliers' production facilities due to a labour disruption; scheduled shutdowns of our customers' production facilities (typically in the third and fourth quarters of each calendar year); our ability to successfully compete with other automotive suppliers; 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; our ability to consistently develop innovative products or processes; impairment charges related to goodwill and long-lived assets; exposure to, and ability to offset, volatile commodities prices; our ability to successfully identify, complete and integrate acquisitions or achieve anticipated synergies; our ability to conduct appropriate due diligence on acquisition targets; the consummation of the Transaction, including required antitrust and other regulatory approvals; the satisfaction or waiver of conditions to complete the Transaction; warranty or required indemnity obligations to the purchaser in the Transaction in relation to pre-closing liabilities; warranty and recall costs; risk of production disruptions due to natural disasters or other catastrophic events; the security and reliability of our IT systems; pension liabilities; legal claims and/or regulatory actions against us, including the ongoing antitrust investigations being conducted by German and Brazilian authorities; 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; changes in credit ratings assigned to us; changes in laws and governmental regulations; costs associated with compliance with environmental laws and regulations; liquidity risks as a result of an unanticipated deterioration of economic conditions; our ability to achieve future investment returns that equal or exceed past returns; the unpredictability of, and fluctuation in, the trading price of our Common Shares; 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 http://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 http://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 http://www.sec.gov
For further information, please contact Louis Tonelli, Vice-President, Investor Relations at +1-905-726-7035.
For teleconferencing questions, please contact Nancy Hansford at +1-905-726-7108.
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