Mr. Don Walker reports
MAGNA ANNOUNCES THIRD QUARTER AND YEAR TO DATE RESULTS
Magna International Inc. has released financial results for the third quarter ended Sept. 30, 2014.
All results are reported in U.S. dollars.
Three months ended Sept. 30, 2014
Magna posted sales of $8.82-billion for the third quarter ended Sept. 30, 2014, an increase of 6 per cent from the third quarter of 2013. Magna achieved
this sales increase in a period when vehicle production increased 8 per cent in
North America and 4 per cent in Europe, both relative to the third quarter of
2013. In the third quarter of 2014, the company's North American and Asian
production sales, complete vehicle assembly sales, and tooling,
engineering and other sales increased, while the company's European and rest of
world production sales decreased, in each case relative to the
comparable quarter in 2013.
Complete vehicle assembly sales increased 9 per cent to $740-million for the
third quarter of 2014 compared with $680-million for the third quarter of
2013, while complete vehicle assembly volumes decreased 5 per cent to
approximately 32,000 units.
During the third quarter of 2014, income from operations before income
taxes was $589-million, net income attributable to Magna International
was $470-million and diluted earnings per share were $2.19,
increases of $198-million, $151-million and 80 cents, respectively, each
compared with the third quarter of 2013.
Excluding other expense, after tax, for the third quarters of 2014 and
2013, income from operations before income taxes, net income
attributable to Magna International and diluted earnings per share
increased $157-million, $124-million and 69 cents, respectively, each
compared with the third quarter of 2013.
During the third quarter ended Sept. 30, 2014, Magna generated cash
from operations of $737-million before changes in operating assets and
liabilities, and invested $18-million in operating assets and
liabilities. Total investment activities for the third quarter of 2014
were $365-million, including $315-million in fixed asset additions, and
a $50-million increase in investments and other assets.
Nine months ended Sept. 30, 2014
Magna posted sales of $27.25-billion for the nine months ended Sept. 30, 2014, an increase of 6 per cent from the nine months ended Sept. 30, 2013. This higher sales level reflected increases in the company's North
American, European and Asian production sales, complete vehicle
assembly sales, and tooling, engineering and other sales, partially
offset by a decrease in rest of world production sales, in each case
relative to the first nine months of 2013.
During the nine months ended Sept. 30, 2014, vehicle production
increased 5 per cent to 12.8 million units in North America and increased 6 per cent to
15.2 million units in Europe, each compared with the first nine months of
2013.
Complete vehicle assembly sales increased 3 per cent to $2.35-billion for the
nine months ended Sept. 30, 2014, compared with $2.27-billion for the
nine months ended Sept. 30, 2013, while complete vehicle assembly
volumes decreased 7 per cent to approximately 102,000 units.
During the nine months ended Sept. 30, 2014, income from operations
before income taxes was $1.86-billion, net income attributable to Magna
International was $1.37-billion and diluted earnings per share
were $6.26, increases of $471-million, $270-million and $1.52,
respectively, each compared with the first nine months of 2013.
Excluding other expense, after tax, for the nine months ended Sept. 30, 2014, and 2013, and the impact of the Austrian tax reform for the
nine months ended Sept. 30, 2014, income from operations before
income taxes, net income attributable to Magna International and
diluted earnings per share increased $457-million, $299-million and
$1.67, respectively, each compared with the nine months ended Sept. 30, 2013.
During the nine months ended Sept. 30, 2014, Magna generated cash from
operations before changes in operating assets and liabilities of $2.16-billion, and invested $363-million in operating assets and liabilities.
Total investment activities for the first nine months of 2014 were
$1.07-billion, including $916-million in fixed-asset additions, and a
$152-million increase in investments and other assets.
A more detailed discussion of the company's consolidated financial results for the
third quarter and nine months ended Sept. 30, 2014, is contained in
the management's discussion and analysis of results of operations and
financial position and the unaudited interim consolidated financial
statements and notes thereto.
Dividends
Today, the company's board of directors declared a quarterly dividend of 38
cents with respect to the company's outstanding common shares for the quarter ended
Sept. 30, 2014. This dividend is payable on Dec. 12, 2014, to
shareholders of record on Nov. 28, 2014.
Other matters
Subject to approval by the Toronto Stock Exchange and the New York Stock
Exchange, the company's board of directors approved a normal course issuer bid to
purchase up to 20 million of the company's common shares, representing
approximately 9.8 per cent of the company's public float of common shares. This new
normal course issuer bid is expected to commence on or about Nov. 13, 2014, and will terminate one year later.
UPDATED 2014 OUTLOOK
Light vehicle production (units)
North America 17.0 million
Europe 20.2 million
Production sales
North America $17.9-billion to $18.3-billion
Europe $9.7-billion to $10.0-billion
Asia $1.6-billion to $1.7-billion
Rest of world $0.6-billion to $0.7-billion
------------------------------
Total production sales $29.8-billion to $30.7-billion
Complete vehicle assembly sales $3.1-billion to $3.3-billion
------------------------------
Total sales $35.8-billion to $37.0-billion
Operating margin(1) Approximately 6.9%
Tax rate(1,2) Approximately 24.5%
Capital spending Approximately $1.4-billion
(1) Excluding other expense, net
(2) Excluding the impact of the Austrian tax reform
In the 2014 outlook, in addition to 2014 light vehicle production, Magna has assumed no material acquisitions or divestitures. In addition, Magna has assumed that foreign exchange rates for the most common currencies
in which it conducts business relative to the company's U.S. dollar reporting
currency will approximate current rates.
Magna will hold a conference call for interested analysts and shareholders to discuss the company's third-quarter results on Wednesday, Nov. 5, 2014, at 8:30 a.m. EST. The conference call will be chaired by Don Walker, chief executive officer. The number to use for this call is 1-800-381-7839. The number for overseas callers is 1-212-231-2913. Please call in at least 10 minutes prior to the call. Magna will also webcast the conference call on its website. The slide presentation accompanying the conference call will be available on the company's website Wednesday morning prior to the call.
CONSOLIDATED STATEMENTS OF INCOME
(in millions of U.S. dollars, except per share figures)
Three months ended Nine months ended
Sept. 30, Sept. 30,
2014 2013 2014 2013
Sales $ 8,820 $ 8,338 $27,245 $25,661
Costs and expenses
Cost of goods sold 7,636 7,273 23,553 22,384
Depreciation and amortization 224 264 664 779
Selling, general and administrative 407 411 1,265 1,188
Interest expense, net 9 5 18 13
Equity income (52) (54) (157) (148)
Other expense, net 7 48 40 54
-------- -------- -------- --------
Income from operations before income taxes 589 391 1,862 1,391
Income taxes 120 73 491 294
-------- -------- -------- --------
Net income $ 469 $ 318 $ 1,371 $ 1,097
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Net loss attributable to non-controlling interests 1 1 2 6
-------- -------- -------- --------
Net income attributable to Magna International 470 319 1,373 1,103
Earnings per common share
Basic $ 2.22 $ 1.41 $ 6.35 $ 4.80
Diluted 2.19 1.39 6.26 4.74
Cash dividends paid per common share 0.38 0.32 1.14 0.96
We seek Safe Harbor.
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