Magna reports improved Q1 2013 profits, forecast rises

Canadian auto parts giant Magna International Inc. hiked its full-year sales forecasts after posting a better-than-expected profit and a 9 per cent rise in revenue in the first quarter of 2013.

Magna, based near Toronto, credited rebounding North American auto demand and increased revenue from Europe, where its sales rose even though the industry overall has been hurt by lower production.

Net earnings climbed to $369 million in the quarter ended March 31, up from $343 million a year earlier. Sales rose 9 per cent to $8.36 billion, the company said in a statement.

Magna’s fortunes are closely linked to the health of the U.S. vehicle market and the Big Three – Ford Motor Co., General Motors Co. and Chrysler Group – and these automakers have seen a steady recovery since the industry bottomed in 2008 and 2009 with bankruptcies by GM and Chrysler.

Magna saw a 3 per cent rise in its North American production sales, the company’s name for its core business of manufacturing vehicle parts. Production sales exclude Magna’s smaller vehicle-assembly and tooling operations.

In Europe, Magna’s production sales gained 5 per cent even as the broader industry struggled. The auto parts maker has been pushing to turn around inefficient operations in Europe, where recovery has lagged North America.

Magna, which makes parts ranging from mirrors and auto bodies to electronics and powertrain systems, said total sales for 2013 were expected to come in between $32.6 billion and $34 billion, above its previous forecast of $32 billion to $33.4 billion. The company also expected total production sales for the year to be between $27.2 billion and $28.2 billion, up from its previous forecast range of $27 billion and $28 billion. The higher forecast was due entirely to better expectations from North America. The production sales forecast for Europe was revised lower.