Magna cuts 2021 revenue forecast as chip shortages expected to reduce vehicle output
But sales more than doubled to $9 billion, reflecting a global light vehicle production increase of 58 per cent.
Magna International Inc. has cut its revenue forecast for the year due to an expected reduction in global light vehicle production caused by ongoing semiconductor chip shortages.
“As a result of significant production disruptions due to the global semiconductor chip shortage that continues to negatively impact global light vehicle production, our sales, Adjusted EBIT and diluted earnings per share came in well below our expectations for the second quarter of 2021,” Magna officials said in an Aug. 6 news release. “The second quarter of 2020 included unprecedented, industry-wide production suspensions due to the COVID-19 pandemic, while the second quarter of 2021 included the production disruptions due to the ongoing global semiconductor chip shortage, making the quarters difficult to compare.”
Magna says it posted sales of US$9.0 billion for the second quarter of 2021, which it says is an increase of 110 per cent over the second quarter of 2020. Global light vehicle production in the quarter was up 58 per cent from last year, but down about 10 per cent in the first quarter this year largely due to the chip shortage, said Magna.
The Aurora, Ont.-based auto parts company, which keeps its books in U.S. dollars, says it earned US$424 million or US$1.40 per diluted share in the second quarter, compared with a net loss of US$647 million or US$2.17 per share a year earlier.
Magna is forecasting that 14.4 million North American light vehicles will be built this year, down 7.7 per cent from its previous forecast for 15.6 million vehicles. European production is expected to decrease 2.2 per cent to 18.1 million units while Chinese production should remain steady at 24.7 million.
As a result, it has reduced its forecast for net income by US$200 million to between US$2 billion and US$2.2 billion. It expects total sales to come in between US$38 billion and US$40 billion, down about US$2.2 billion.
“Considering the extent of the unexpected production disruptions in the second quarter as a result of the semiconductor chip shortage, we were pleased with our overall performance for the quarter. I attribute this to our operating model, which allows us to remain flexible and nimble in adapting to changes in the production environment,” said Magna CEO Swamy Kotagiri. “We continue to be highly focused on driving operational excellence across the Company to ensure we further enhance our competitive position in the industry.”