Magna Announces Second Quarter and Year to Date Results
07 Aug, 2015, 10:01 BST
AURORA, Ontario, August 7, 2015 /PRNewswire/ --
Magna International Inc. (TSX: MG; NYSE: MGA) today reported financial results for the second quarter ended June 30, 2015.
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2015 2014 2015 2014
Sales $ 8,133 $ 8,911 $ 15,905 $ 17,366
Adjusted EBIT(1) $ 677 $ 722 $ 1,308 $ 1,340
Income from continuing
operations before
income taxes $ 726 $ 704 $ 1,347 $ 1,298
Net income from
continuing operations
attributable to Magna
International Inc. $ 538 $ 519 $ 993 $ 921
Diluted earnings
per share from
continuing operations $ 1.29 $ 1.18 $ 2.39 $ 2.08
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.
BASIS OF PRESENTATION
In the second quarter of 2015, we signed an agreement to sell substantially all of our interiors operations to Grupo Antolin, a leading global supplier of automotive interior systems. The purchase price for the operations, excluding certain assets, is approximately $525 million, subject to customary closing adjustments. We will continue managing our seating operations which are not included in this arrangement. The assets and liabilities, and operating results for the previously reported interiors operations are presented as discontinued operations, and have therefore been excluded from continuing operations for all periods presented in this press release.
THREE MONTHS ENDED JUNE 30, 2015
We posted sales of $8.1 billion for the second quarter ended June 30, 2015, a decrease of 9% from the second 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 second quarter of 2015. Foreign currency translation reduced our sales by approximately $890 million, as compared to the second quarter of 2014. Excluding the impact of foreign currency translation, our sales increased 1% in the second quarter of 2015, compared to the second quarter of 2014. North American light vehicle production increased 3% to 4.6 million units and European light vehicle production increased marginally to 5.4 million units in the second quarter of 2015, compared to the second quarter of 2014.
Excluding the impact of foreign currency translation, our complete vehicle assembly sales decreased 8% in the second quarter of 2015, compared to the second quarter of 2014. Complete vehicle assembly volumes decreased 17% to approximately 28,500 units.
During the second quarter of 2015, income from continuing operations before income taxes was $726 million, net income from continuing operations was $538 million and diluted earnings per share from continuing operations were $1.29, increases of $22 million, $19 million and $0.11 respectively, each compared to the second quarter of 2014.
For the second quarter of 2015, other (income) expense positively impacted income from continuing operations before income taxes by $57 million, net income from continuing operations attributable to Magna International Inc. by $42 million, and diluted earnings per share from continuing operations by $0.10, respectively.
For the second quarter of 2014, other (income) expense negatively impacted income from continuing operations before income taxes by $11 million, net income from continuing operations attributable to Magna International Inc. by $10 million, and diluted earnings per share from continuing operations by $0.02, respectively.
During the second quarter ended June 30, 2015, we generated cash from operations of $711 million before changes in operating assets and liabilities, and invested $271 million in operating assets and liabilities. Total investment activities for the second quarter of 2015 were $402 million, including $361 million in fixed asset additions and $41 million in investments and other assets.
SIX MONTHS ENDED JUNE 30, 2015
We posted sales of $15.9 billion for the six months ended June 30, 2015, a decrease of 8% from the six months ended June 30, 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 six months of 2015. Foreign currency translation reduced our sales by approximately $1.7 billion, as compared to the first six months of 2014. Excluding the impact of foreign currency translation, our sales increased 2% in the first six months of 2015, compared to the first six months of 2014.
During the six months ended June 30, 2015, vehicle production increased 1% to 8.7 million units in North America and increased 1% to 10.6 million units in Europe, each compared to the first six months of 2014.
Excluding the impact of foreign currency translation, our complete vehicle assembly sales decreased 10% in the first six months of 2015, compared to the first six months of 2014. Complete vehicle assembly volumes decreased 20% to approximately 56,000 units.
During the six months ended June 30, 2015, income from continuing operations before income taxes was $1.4 billion, net income from continuing operations was $993 million and diluted earnings per share from continuing operations were $2.39, increases of $49 million, $72 million and $0.31, respectively, each compared to the first six months of 2014.
For the six months ended June 30, 2015, other (income) expense positively impacted income from continuing operations before income taxes by $57 million, net income from continuing operations attributable to Magna International Inc. by $42 million, and diluted earnings per share from continuing operations by $0.10, respectively.
For the six months ended June 30, 2014, other (income) expense negatively impacted income from continuing operations before income taxes by $33 million. In addition, for the six months ended June 30, 2014, other (income) expense and the impact of the Austrian tax reform together negatively impacted net income from continuing operations attributable to Magna International Inc. by $62 million, and diluted earnings per share from continuing operations by $0.14, respectively.
During the six months ended June 30, 2015, we generated cash from operations before changes in operating assets and liabilities of $1.3 billion, and invested $620 million in operating assets and liabilities. Total investment activities for the first six months of 2015 were $706 million, including $627 million in fixed asset additions, $78 million in investments and other assets and $1 million to purchase subsidiaries.
A more detailed discussion of our consolidated financial results for the second quarter and six months ended June 30, 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 June 30, 2015. This dividend is payable on September 11, 2015 to shareholders of record on August 28, 2015.
UPDATED 2015 OUTLOOK
The table below reflects our 2015 outlook and 2014 actual results, both from continuing operations:
2015 Outlook 2014 Actual
Light Vehicle Production (Units)
North America 17.4 million 17.0 million
Europe 20.3 million 20.1 million
Production Sales
North America $17.3 - $17.9 billion $17.4 billion
Europe $6.8 - $7.2 billion $8.8 billion
Asia $1.6 - $1.8 billion $1.6 billion
Rest of World $0.5 - $0.6 billion $0.7 billion
Total Production Sales $26.2 - $27.5 billion $28.5 billion
Complete Vehicle Assembly Sales $2.2 - $2.5 billion $3.2 billion
Total Sales $30.9 - $32.6 billion $34.4 billion
Operating Margin(1) Approximately 8% 7.7%
Tax Rate(1) Approximately 26% 25.0%
Capital Spending $1.3 - $1.5 billion $1.5 billion
(1) Excluding other (income) expense, net
In this 2015 outlook, in addition to 2015 light vehicle production, we have assumed no material acquisitions or divestitures other than the divestiture of substantially all of our interior operations as discussed 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 319 manufacturing operations and 85 product development, engineering and sales centres in 29 countries. We have over 136,000 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 second quarter results on Friday, August 7, 2015 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 1-800-743-9807. The number for overseas callers is 1-416-641-6701. 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 Friday morning 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 sale of substantially all of our Interiors operations to Grupo Antolin (the "Grupo 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; 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; 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; impairment charges related to goodwill and long-lived assets; exposure to, and ability to offset, volatile commodities prices; risk of production disruptions due to natural disasters or other catastrophic events; the security and reliability of our IT systems; 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; the consummation of the Grupo Transaction; the satisfaction or waiver of conditions to complete the Grupo Transaction, including obtaining required regulatory approvals; warranty or indemnity obligations to the purchaser in the Grupo Transaction in relation to pre-closing liabilities; our ability to successfully identify, complete and integrate acquisitions or achieve anticipated synergies; our ability to conduct appropriate due diligence on acquisition targets; risks of conducting business in foreign markets, including China, India, Russia, Eastern Europe, Thailand, Brazil, Argentina and other non-traditional markets for us; ongoing pricing pressures, including our ability to offset price concessions demanded by our customers; our ability to consistently develop innovative products or processes; warranty and recall costs; pension liabilities; 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 905-726-7035.
For teleconferencing questions, please contact Nancy Hansford at +1-905-726-7108.
SOURCE Magna International Inc.