An anonymous director reports
MAGNA ANNOUNCES SECOND QUARTER AND YEAR TO DATE RESULTS
Magna International Inc. has released its financial results for the second quarter ended June
30, 2015 (all amounts are in U.S. dollars).
FINANCIAL HIGHLIGHTS
(In millions of U.S. dollars, except per share)
Three months ended June 30, Six months ended June 30,
2015 2014 2015 2014
Sales $ 8,133 $ 8,911 $ 15,905 $ 17,366
Adjusted EBIT 677 722 1,308 1,340
Income from continuing
operations before income taxes 726 704 1,347 1,298
Net income from continuing operations
attributable to Magna International 538 519 993 921
Diluted earnings per share
from continuing operations 1.29 1.18 2.39 2.08
Basis of presentation
In the second quarter of 2015, the company signed an agreement to sell
substantially all of its interiors operations to Grupo Antolin, a
leading global supplier of automotive interior systems. The purchase
price for the operations, excluding certain assets, is approximately
$525-million, subject to customary closing adjustments. The company will
continue managing its seating operations, which are not included in this
arrangement. The assets and liabilities, and operating results for the
previously reported interiors operations, are presented as discontinued
operations and have therefore been excluded from continuing operations
for all periods presented in this press release.
Three months ended June 30, 2015
The company posted sales of $8.1-billion for the second quarter ended June 30,
2015, a decrease of 9 per cent from the second quarter of 2014. The weakening
of certain currencies against the U.S.-dollar reporting currency, in
particular the euro and Canadian dollar, had a significant negative
impact on reported sales for the second quarter of 2015. Foreign
currency translation reduced sales by approximately $890-million,
as compared with the second quarter of 2014. Excluding the impact of
foreign currency translation, sales increased 1 per cent in the second
quarter of 2015, compared with the second quarter of 2014. North
American light vehicle production increased 3 per cent to 4.6 million units and
European light vehicle production increased marginally to 5.4 million
units in the second quarter of 2015, compared with the second quarter of
2014.
Excluding the impact of foreign currency translation, complete
vehicle assembly sales decreased 8 per cent in the second quarter of 2015,
compared with the second quarter of 2014. Complete vehicle assembly
volumes decreased 17 per cent to approximately 28,500 units.
During the second quarter of 2015, income from continuing operations
before income taxes was $726-million, net income from continuing
operations was $538-million and diluted earnings per share from
continuing operations were $1.29, increases of $22-million, $19-million
and 11 cents, respectively, each compared with the second quarter of 2014.
For the second quarter of 2015, other (income) expense positively
impacted income from continuing operations before income taxes by $57-million, net income from continuing operations attributable to Magna
International by $42-million and diluted earnings per share from
continuing operations by 10 cents, respectively.
For the second quarter of 2014, other (income) expense negatively
impacted income from continuing operations before income taxes by $11-million, net income from continuing operations attributable to Magna
International by $10-million and diluted earnings per share from
continuing operations by two cents, respectively.
During the second quarter ended June 30, 2015, the company generated cash from
operations of $711-million before changes in operating assets and
liabilities, and invested $271-million in operating assets and
liabilities. Total investment activities for the second quarter of 2015
were $402-million, including $361-million in fixed asset additions, and
$41-million in investments and other assets.
Six months ended June 30, 2015
The company posted sales of $15.9-billion for the six months ended June 30, 2015,
a decrease of 8 per cent from the six months ended June 30, 2014. The weakening
of certain currencies against the U.S.-dollar reporting currency, in
particular the euro and Canadian dollar, had a significant negative
impact on reported sales for the first six months of 2015. Foreign
currency translation reduced sales by approximately $1.7-billion,
as compared with the first six months of 2014. Excluding the impact of
foreign currency translation, sales increased 2 per cent in the first six
months of 2015, compared with the first six months of 2014.
During the six months ended June 30, 2015, vehicle production increased
1 per cent to 8.7 million units in North America and increased 1 per cent to 10.6
million units in Europe, each compared with the first six months of 2014.
Excluding the impact of foreign currency translation, complete
vehicle assembly sales decreased 10 per cent in the first six months of 2015,
compared with the first six months of 2014. Complete vehicle assembly
volumes decreased 20 per cent to approximately 56,000 units.
During the six months ended June 30, 2015, income from continuing
operations before income taxes was $1.4-billion, net income from
continuing operations was $993-million and diluted earnings per share
from continuing operations were $2.39, increases of $49-million, $72-million and 31 cents, respectively, each compared with the first six months
of 2014.
For the six months ended June 30, 2015, other (income) expense
positively impacted income from continuing operations before income
taxes by $57-million, net income from continuing operations
attributable to Magna International by $42-million and diluted
earnings per share from continuing operations by 10 cents, respectively.
For the six months ended June 30, 2014, other (income) expense
negatively impacted income from continuing operations before income
taxes by $33-million. In addition, for the six months ended June 30,
2014, other (income) expense and the impact of the Austrian tax reform
together negatively impacted net income from continuing operations
attributable to Magna International by $62-million and diluted
earnings per share from continuing operations by 14 cents, respectively.
During the six months ended June 30, 2015, the company generated cash from
operations before changes in operating assets and liabilities of $1.3-billion, and invested $620-million in operating assets and liabilities.
Total investment activities for the first six months of 2015 were $706-million, including $627-million in fixed asset additions, $78-million
in investments and other assets, and $1-million to purchase
subsidiaries.
A more detailed discussion of the company's consolidated financial results for the
second quarter and six months ended June 30, 2015, 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
Yesterday, the board of directors declared a quarterly dividend of 22 cents with respect to outstanding common shares for the quarter ended
June 30, 2015. This dividend is payable on Sept. 11, 2015, to
shareholders of record on Aug. 28, 2015.
Updated 2015 outlook
The table reflects the company's 2015 outlook and 2014 actual results, both
from continuing operations.
2015 OUTLOOK AND 2014 ACTUAL RESULTS
2015 outlook 2014 actual
Light vehicle production (units)
North America 17.4 million 17.0 million
Europe 20.3 million 20.1 million
Production sales
North America $17.3-billion-$17.9-billion $17.4-billion
Europe $6.8-billion-$7.2-billion $8.8-billion
Asia $1.6-billion-$1.8-billion $1.6-billion
Rest of world $500-million-$600-million $0.7-billion
Total production sales $26.2-$27.5-billion $28.5-billion
Complete vehicle assembly sales $2.2-billion-$2.5-billion $3.2-billion
Total sales $30.9-billion $32.6-billion $34.4-billion
Operating margin Approximately 8% 7.7%
Tax rate Approximately 26% 25.0%
Capital spending $1.3-billion-$1.5-billion $1.5-billion
In this 2015 outlook, in addition to 2015 light vehicle production, the company has assumed no material acquisitions or divestitures other than the
divestiture of substantially all of its interior operations as
discussed above. In addition, the company has assumed that foreign exchange
rates for the most common currencies in which it conducts business
relative to its U.S.-dollar reporting currency will approximate current
rates.
CONSOLIDATED STATEMENTS OF INCOME
(In millions of U.S. dollars, except per share)
Three months ended Six months ended
June 30, June 30,
2015 2014 2015 2014
Sales $ 8,133 $ 8,911 $ 15,905 $ 17,366
Costs and expenses
Cost of goods sold 6,962 7,626 13,630 14,900
Depreciation and amortization 198 211 392 417
Selling, general and administrative 348 407 678 810
Interest expense, net 8 7 18 9
Equity income (52) (55) (103) (101)
Other (income) expense, net (57) 11 (57) 33
Income from continuing operations before income taxes 726 704 1,347 1,298
Income taxes 191 185 358 378
Net income from continuing operations 535 519 989 920
(Loss) from discontinued operations, net of tax (55) (9) (45) (18)
Net income 480 510 944 902
(Loss) from continuing operations attributable to
non-controlling interests 3 - 4 1
Net income attributable to Magna International 483 510 948 903
Basic earnings per share
Continuing operations 1.31 1.20 2.42 2.11
Discontinued operations (0.13) (0.02) (0.11) (0.04)
Attributable to Magna International 1.18 1.18 2.31 2.07
Diluted earnings per share (restated)
Continuing operations 1.29 1.18 2.39 2.08
Discontinued operations (0.13) (0.02) (0.11) (0.04)
Attributable to Magna International 1.16 1.16 2.28 2.04
Cash dividends paid per common share (restated) 0.22 0.19 0.44 0.38We seek Safe Harbor.
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