Magna shares tumble 5% on earnings miss By Investing.com

Aurora, Ontario – Magna International (NYSE:) Inc. (TSX: MG; NYSE: MGA) reported a significant earnings loss in the first quarter of 2024.

The auto supplier reported adjusted earnings per share (EPS) of $1.08, below analyst consensus of $1.25. Despite meeting revenue expectations of $10.97 billion, which was in line with the consensus estimate, the company's shares fell 4.94% as the market responded negatively to the earnings shortfall.

The company's sales saw a modest 3% increase to US$11.0 billion compared to the first quarter of the previous year, slightly outpacing the 2% increase in global light vehicle production. This growth is due to the launch of new programs and the acquisition of… Vioneer (NYSE:) Active Safety. However, challenges such as lower volumes in the complete vehicle segment and currency fluctuations impacted the results.

Magna also disclosed asset impairment and restructuring costs totaling $316 million related to Fisker (OTC:), which impacted net income attributable to Magna International Inc., reducing it to $9 million for the quarter from $209 million. In the same period last year. Diluted EPS for the quarter was reported at $0.03, a stark decline from $0.73 in Q1 2023.

The company maintained its 2024 EBIT margin forecast range of 5.4% to 6.0%, indicating stability in its future financial outlook. In the press release, management highlighted operational excellence and cost initiatives, productivity and efficiency improvements, and cost reductions at some previously underperforming facilities as major contributors to the increase in adjusted EBIT to $469 million from $449 million in the first quarter of 2023.

Magna's CEO commented on the results, emphasizing the company's commitment to operational improvements and cost efficiency, which helped mitigate some of the negative impacts on profitability. However, the market reaction suggests that investors were expecting a stronger performance.

The company's financial condition remains strong, with $591 million generated from operations before changes in operating assets and liabilities and a $134 million return to shareholders through dividends. Looking ahead, Magna's full-year forecast remains unchanged.

This article was created with the power of artificial intelligence and reviewed by an editor. For more information, see our terms and conditions.