AURORA, Ontario, February 26, 2016 /PRNewswire/ --
Magna International Inc. (TSX: MG; NYSE: MGA) today reported financial results for the fourth quarter and year ended December 31, 2015.
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, 2015 2014 2015 2014 Sales $ 8,568 $ 8,790 $ 32,134 $ 34,403 Adjusted EBIT(1) $ 656 $ 714 $ 2,529 $ 2,681 Income from continuing operations before income taxes $ 624 $ 696 $ 2,651 $ 2,605 Net income from continuing operations attributable to Magna International Inc. $ 483 $ 516 $ 1,946 $ 1,924 Diluted earnings per share from continuing operations $ 1.19 $ 1.23 $ 4.72 $ 4.44 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 (income) expense, net.
BASIS OF PRESENTATION
In the third quarter of 2015, we sold substantially all of our interiors operations (excluding our seating operations). The assets and liabilities, and operating results for the previously reported interiors operations are presented as discontinued operations and have therefore been excluded from both continuing operations and segment results for all periods presented in the attached financial statements. This Press Release reflects the results of continuing operations, unless otherwise noted.
THREE MONTHS ENDED DECEMBER 31, 2015
We posted sales of $8.6 billion for the fourth quarter ended December 31, 2015, a decrease of 3% from the fourth 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 fourth quarter of 2015. Foreign currency translation reduced our sales by approximately $770 million, as compared to the fourth quarter of 2014. Excluding the impact of foreign currency translation, our sales increased 6% in the fourth quarter of 2015, compared to the fourth quarter of 2014. North American light vehicle production increased 4% to 4.5 million units and European light vehicle production increased 7% to 5.5 million units in the fourth quarter of 2015, compared to the fourth quarter of 2014.
Excluding the impact of foreign currency translation, our complete vehicle assembly sales decreased 3% in the fourth quarter of 2015, compared to the fourth quarter of 2014. Complete vehicle assembly volumes decreased 24% to approximately 25,000 units.
During the fourth quarter of 2015, income from continuing operations before income taxes was $624 million, net income from continuing operations attributable to Magna International Inc. was $483 million and diluted earnings per share from continuing operations were $1.19, decreases of $72 million, $33 million and $0.04 respectively, each compared to the fourth quarter of 2014.
For the fourth quarter of 2015, other expense (income) negatively impacted income from continuing operations before income taxes by $15 million, net income from continuing operations attributable to Magna International Inc. by $15 million, and diluted earnings per share from continuing operations by $0.03, respectively.
During the fourth quarter ended December 31, 2015, we generated cash from operations of $773 million before changes in operating assets and liabilities and $243 million in operating assets and liabilities. Total investment activities for the fourth quarter of 2015 were $894 million, including $604 million in fixed asset additions, $221 million in acquisitions and $69 million in investments and other assets.
YEAR ENDED DECEMBER 31, 2015
We posted sales of $32.1 billion for the year ended December 31, 2015, a decrease of 7% from the year ended December 31, 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 in 2015. Foreign currency translation reduced our sales by approximately $3.35 billion, as compared to 2014. Excluding the impact of foreign currency translation, our sales increased 3% in 2015, compared to 2014.
In 2015, vehicle production increased 3% to 17.5 million units in North America and increased 4% to 21.0 million units in Europe, each compared to 2014.
Excluding the impact of foreign currency translation, our complete vehicle assembly sales decreased 10% in 2015, compared to 2014. Complete vehicle assembly volumes decreased 23% to approximately 104,000 units.
For the year ended December 31, 2015, income from continuing operations before income taxes was $2.7 billion, net income from continuing operations attributable to Magna International Inc. was $1.9 billion and diluted earnings per share from continuing operations were $4.72, increases of $46 million, $22 million and $0.28, respectively, each compared to 2014.
For the year ended December 30, 2015, other expense (income) positively impacted income from continuing operations before income taxes by $166 million, net income from continuing operations attributable to Magna International Inc. by $95 million, and diluted earnings per share from continuing operations by $0.23 respectively.
During 2015, we generated cash from operations before changes in operating assets and liabilities of $2.7 billion, and invested $344 million in operating assets and liabilities. Total investment activities for 2015 were $2.0 billion, including $1.6 billion in fixed asset additions, $222 million in acquisitions and $221 million in investments other assets.
Don Walker, Magna's Chief Executive Officer commented: "Overall, we are satisfied with the progress we made during 2015. We took important steps to reposition our product portfolio for the future, in particular entering into a transaction to acquire Getrag, and disposing of substantially all of our interiors business.
On the operations front, excluding the negative translation impact from the strengthening of the U.S. dollar, we reported strong results. We have experienced some challenges in certain facilities which we are working to overcome.
Looking forward, we are excited about Magna's future. We are confident that our ability to integrate our vast capabilities, a competitive advantage compared to our peers, together with our accelerated innovation activities, leave us well positioned to remain a key supplier partner to automotive manufacturers. We believe this strong positioning will enable us to drive continued growth."
A more detailed discussion of our consolidated financial results for the fourth quarter and year ended December 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.
INCREASED QUARTERLY CASH DIVIDEND
Our Board of Directors also declared a quarterly dividend with respect to our outstanding Common Shares for the quarter ended December 31, 2015. The Board increased the dividend by 14% to $0.25 per share. This dividend is payable on March 24, 2016 to shareholders of record on March 11, 2016.
Vince Galifi, Magna's Chief Financial Officer, stated: "Our quarterly dividend of $0.25, an increase of 14%, represents a record dividend rate for Magna. This is the sixth straight year of dividend increase in the fourth quarter, reflecting our commitment to returning capital to shareholders and the ongoing confidence our Board has in Magna's future."
UPDATED 2016 OUTLOOK
Light Vehicle Production (Units) North America 18.0 million Europe 21.0 million Production Sales North America $19.2 billion - $19.8 billion Europe $8.6 billion - $9.0 billion Asia $2.1 billion - $2.3 billion Rest of World $0.4 billion - $0.5 billion Total Production Sales $30.3 billion - $31.6 billion Complete Vehicle Assembly Sales $1.7 billion - $2.0 billion Total Sales $34.6 billion - $36.3 billion Adjusted EBIT(1) High 7% range Interest Expense, net Approximately $80 million Tax Rate(2) 25% - 26% Capital Spending $1.8 billion - $2.0 billion (1) We believe Adjusted EBIT is the most appropriate measure of operational profitability or loss for our reporting segments. Adjusted EBIT represents income from operations before income taxes; interest expense, net; and other expense (income), net. (2) Excluding other expense (income), net
In this outlook, in addition to 2016 light vehicle production, we have assumed no material unannounced 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 a leading global automotive supplier with 305 manufacturing operations and 93 product development, engineering and sales centres in 29 countries. We have over 139,000 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, 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 fourth quarter and year end 2015 results on Friday, February 26, 2016 at 8:00 a.m. EST. The conference call will be chaired by Donald J. Walker, Chief Executive Officer. The number to use for this call is 1-800-682-8921. The number for overseas callers is 1-303-223-4361. 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 Monday morning prior to the call.
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 2016; complete vehicle assembly sales; Adjusted EBIT; net interest expense; effective income tax rate; fixed asset expenditures; implementation of improvement plans in our underperforming divisions and/or restructuring actions; implementation of our business strategy including repositioning of our product portfolio and our accelerated innovation activities; growth prospects for our business; and future returns of capital to our shareholders, including through dividends or share repurchases. 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 potential for a deterioration of economic conditions or an extended period of economic uncertainty; declines in consumer confidence and the impact on production volume levels; continuing global or regional economic uncertainty; underperformance of one or more of our operating divisions; our ability to successfully launch material new or takeover business; risks of conducting business in foreign markets, including China, Russia, India, Argentina and Brazil and other non-traditional markets for us; legal claims and/or regulatory actions against us; exposure to, and ability to offset, volatile commodities prices; fluctuations in relative currency values; our ability to successfully identify, complete and integrate acquisitions or achieve anticipated synergies; our ability to conduct appropriate due diligence on acquisition targets; ongoing pricing pressures, including our ability to offset price concessions demanded by our customers; warranty and recall costs; inability to sustain or grow our business; our ability to successfully compete with other automotive suppliers; shifts in market share away from our top customers; shifts in market shares among vehicles or vehicle segments, or shifts away from vehicles on which we have significant content; a shift away from technologies in which we are investing; 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; restructuring actions by OEMs, including plant closures; restructuring, downsizing and/or other significant non-recurring costs; scheduled shutdowns of our customers' production facilities (typically in the third and fourth quarters of each calendar year); shutdown of our or our customers' or sub-suppliers' production facilities due to a labour disruption; a prolonged disruption in the supply of components to us from our suppliers; impairment charges related to goodwill, long-lived assets and deferred tax assets; risk of production disruptions due to natural disasters; pension liabilities; 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; inability to achieve future investment returns that equal or exceed past returns; risks arising due to the failure of a major financial institution; liquidity risks; bankruptcy or insolvency of a major customer or supplier; the unpredictability of, and fluctuation in, the trading price of our Common Shares; 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; 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:
Louis Tonelli, Vice-President, Investor Relations at +1-905-726-7035.
For teleconferencing questions, please contact Nancy Hansford at +1-905-726-7108.
SOURCE Magna International Inc.