Magna reports more sales but lower earnings
Despite higher revenue, Canadian auto parts maker Magna International Inc.'s third-quarter 2011 earnings fell 62 per cent - a decline the company attributed to execution problems in Europe.
Despite higher revenue, Canadian auto parts maker Magna International Inc.’s third-quarter 2011 earnings fell 62 per cent – a decline the company attributed to execution problems in Europe.
Aurora, Ont.-based Magna said net earnings dropped to US$102 million from US$266 million a year earlier. This came as revenue rose 21 per cent to US$6.97 billion, with vehicle production up in both North America and Europe.
In a statement, the company cited operating inefficiencies, particularly at its interiors and exteriors systems business in Europe, as the cause of the drop-off in earnings; Magna said two struggling divisions in Europe that make exterior vehicle parts lost a total of US$37 million in the quarter, and the company also recorded a US$113 million charge related to the sale of a third struggling facility in Germany that makes vehicle carpets. The two money-losing European facilities Magna still owns are forecast by the company to lose up to a total of US$25 million in the fourth quarter
But the news wasn’t all bad. Magna said vehicle production increased four per cent in Western Europe during the quarter and eight per cent in North America.