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Magna looking to partner in emerging markets

Auto parts maker Magna International Inc. is looking for acquisitions in Asia or Eastern Europe, after facing challenges at its South American operations.


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August 12, 2013 by Canadian Plastics

Auto parts maker Magna International Inc. is looking for acquisitions in Asia or Eastern Europe, after facing challenges at its South American operations.

According to Aurora, Ont.-based Magna, it’s interested in snatching up a company with innovative technology that would allow it to grow in markets such as China, Russia and other parts of Asia and Eastern Europe.

“Certainly we will be and have looked at acquisitions to supplement our growth,” chief financial officer Vince Galifi told analysts during a conference call on Aug. 9. “A big focus is technology – what technologies are out there that could supplement what we have, complement what we have, advance what we have. We are also looking at acquisitions that could assist us to grow faster in markets that are a priority to us.”

The auto parts manufacturer is taking a more cautious approach to growth in India and South America. The company said it lost “tens of millions” of dollars on its operations in South America, partly due to high inflation.

Magna, which owns seating companies in Argentina and Brazil, is having issues getting parts in and out of the country, paying for rising labor costs and convincing customers to pay for the inflation-related price increases.

“It is an uphill battle so I don’t see us being aggressive in growing our business in a big way in Brazil and Argentina until we have got a good handle on what we are doing down there,” Galifi said. “But we are certainly making headway, especially in the operational issues.”

According to Magna, its production sales in Europe were up 14% from the same quarter last year, even though overall European vehicle production was down by 1%. 

North America accounted for $4.59 billion of sales during the quarter, while Europe contributed $3.76 billion. The rest of the world accounted for $609 million.

Complete vehicle assembly sales increased 23% to $796 million in the quarter while complete vehicle assembly volumes increased 17% to approximately 39,000 units.

Magna has 123,000 employees at 314 manufacturing operations and 89 product development, engineering and sales centres in 29 countries.