Magna’s Q2 results take big hit from COVID-19 auto production shutdowns
The Aurora, Ont.-based auto parts maker says the impact was far worse than the quarterly declines during the 2008-2009 financial crisis.
Automotive parts maker Magna International Inc. says COVID-19 shutdowns of automotive production caused a US$1.2 billion drop in its earnings and US$5.5 billion hit to sales in the second quarter.
In an Aug. 7 statement, the Aurora, Ont.-based company described the impact as being far worse than the quarterly declines during the 2008-2009 financial crisis as it lost US$647 million in the second quarter, compared with a profit of US$452 million a year earlier.
“During the second quarter of 2020, our most significant production markets of North America and Europe experienced vehicle production declines compared to the second quarter of 2019 that, both in percentage and absolute volume terms, far exceeded the worst comparable quarterly declines experienced during the 2008-2009 financial crisis,” the statement said. “These declines are largely due to our customers’ production suspensions and volume reductions attributable to the COVID-19 pandemic.”
Revenues for the three months ended June 30 dropped nearly 58 per cent to US$4.3 billion, compared with US$10.1 billion in the second quarter of 2019.
The company also said its global light vehicle production was down 42 per cent while production in its two largest markets in North American and Europe were down 70 and 59 per cent respectively.
“While our second quarter results were impacted by a precipitous decline in global vehicle production caused by the COVID-19 pandemic, I am pleased we have been able to successfully and safely restart operations at our plants around the world,” said CEO Don Walker. “Additionally, we have taken several actions across the company to reduce our cost structure to be aligned with our updated expectations for future vehicle production. We expect our second half 2020 results to begin to reflect these actions. I am confident that Magna will emerge from the recent economic upheaval as strong as ever.”