Mr. Don Walker reports
MAGNA ANNOUNCES RECORD SECOND QUARTER AND YEAR TO DATE RESULTS
Magna International Inc. has released its financial results for the second quarter ended June 30, 2016 (all amounts are in U.S. dollars).
FINANCIAL HIGHLGHTS
(In millions of U.S. dollars, except per share)
Three months ended June 30, Six months ended June 30,
2016 2015 2016 2015
Sales $9,443 $8,133 $18,343 $15,905
Adjusted EBIT 789 677 1,487 1,308
Income from continuing operations before
income taxes 767 726 1,442 1,347
Net income from continuing operations
attributable to Magna International 558 538 1,050 993
Diluted earnings per share
from continuing operations 1.41 1.29 2.63 2.39
Don Walker, Magna's chief executive officer, commented: "We had a record second quarter in sales, adjusted earnings before interest, taxes, depreciation and amortization, and adjusted earnings before interest and taxes. Contributing to our results has been the organization's continuing focus on manufacturing excellence and operational improvements. Going forward, we plan to remain highly focused on innovation to strengthen our competitive positioning for the car of the future."
Three months ended June 30, 2016
The company posted sales of $9.4-billion for the second quarter ended June 30, 2016, an increase of 16 per cent over the second quarter of 2015. North American and European light vehicle production increased 2 per cent and 6 per cent, respectively, in the second quarter of 2016 compared with the second quarter of 2015.
The company's complete vehicle assembly sales increased 7 per cent in the second quarter of 2016, compared with the second quarter of 2015, while its complete vehicle assembly volumes decreased 9 per cent from the comparable quarter to approximately 26,000 units.
During the second quarter of 2016, income from continuing operations before income taxes was $767-million and net income from continuing operations attributable to Magna International was $558-million, increases of 6 per cent and 4 per cent, respectively, both compared with the second quarter of 2015. Diluted earnings per share from continuing operations increased 9 per cent in the second quarter of 2016, which include the favourable impact of a reduced share count.
During the second quarter ended June 30, 2016, the company generated cash from operations of $864-million before changes in operating assets and liabilities, and invested $151-million in operating assets and liabilities. Total investment activities for the second quarter of 2016 were $543-million, including $409-million in fixed asset additions, $103-million in investments and other assets, and $31-million to purchase subsidiaries.
Six months ended June 30, 2016
The company posted sales of $18.3-billion for the six months ended June 30, 2016, an increase of 15 per cent from the six months ended June 30, 2015. Excluding the impact of foreign currency translation, sales increased 18 per cent in the first six months of 2016, compared with the first six months of 2015. North American and European light vehicle production increased 6 per cent and 7 per cent, respectively, in the first six months of 2016 compared with the first six months of 2015.
The company's complete vehicle assembly sales increased 3 per cent in the first six months of 2016, compared with the first six months of 2015. Complete vehicle assembly volumes decreased 13 per cent to approximately 49,000 units.
During the six months ended June 30, 2016, income from continuing operations before income taxes was $1.4-billion, net income from continuing operations attributable to Magna International was $1.1-billion and diluted earnings per share from continuing operations were $2.63, increases of $95-million, $57-million and 24 cents, respectively, each compared with the first six months of 2015.
During the six months ended June 30, 2016, the company generated cash from operations before changes in operating assets and liabilities of $1.6-billion, and invested $620-million in operating assets and liabilities. Total investment activities for the first six months of 2016 were $2.7-billion, including $1.8-billion to purchase subsidiaries, $755-million in fixed asset additions, and $157-million in investments and other assets.
A more detailed discussion of the company's consolidated financial results for the second quarter and six months ended June 30, 2016, 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.
Return of capital to shareholders
During the six months ended June 30, 2016, Magna repurchased 15.1 million shares for $608-million pursuant to its normal course issuer bid, which expires in November, 2016. The company has 22.3 million shares remaining and available for purchase under the NCIB.
Yesterday, the board of directors declared a quarterly dividend of 25 cents with respect to outstanding common shares for the quarter ended June 30, 2016. This dividend is payable on Aug. 26, 2016, to shareholders of record on Sept. 9, 2016.
UPDATED 2016 OUTLOOK
Light vehicle production (units)
North America 18.0 million
Europe 21.4 million
Production sales
North America $19.4-billion-$20.0-billion
Europe $8.8-billion-$9.2-billion
Asia $2.1-billion-$2.3-billion
Rest of world $300-million-$400-million
Total production sales $30.6-billion-$31.9-billion
Complete vehicle assembly sales $2.0-billion-$2.3-billion
Total sales $35.5-billion-$37.2-billion
EBIT margin(1) Approximately 8%
Interest expense, net Approximately $90-million
Tax rate(1) Approximately 26%
Capital spending $1.8-billion-$2.0-billion
(1) Excluding other expense, net
In this 2016 outlook, in addition to 2016 light vehicle production, the company has assumed no material acquisitions or divestitures. 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 June 30, Six months ended June 30,
2016 2015 2016 2015
Sales $9,443 $8,133 $18,343 $15,905
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Costs and expenses
Cost of goods sold 8,045 6,962 15,664 13,630
Depreciation and amortization 262 198 508 392
Selling, general and administrative 414 348 806 678
Interest expense, net 22 8 45 18
Equity income (67) (52) (122) (103)
Other income, net - (57) - (57)
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Income from continuing operations
before income taxes 767 726 1,442 1,347
Income taxes 206 191 378 358
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Net income from continuing
operations 561 535 1,064 989
(Loss) from discontinued operations,
net of tax - (55) - (45)
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Net income 561 480 1,064 944
(Income) loss from continuing
operations attributable to
non-controlling interests (3) 3 (14) 4
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Net income attributable to Magna
International 558 483 1,050 948
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Basic earnings (loss) per share
Continuing operations 1.42 1.31 2.65 2.42
Discontinued operations - (0.13) - (0.11)
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Attributable to Magna International 1.42 1.18 2.65 2.31
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Diluted earnings (loss) per share
Continuing operations 1.41 1.29 2.63 2.39
Discontinued operations - (0.13) - (0.11)
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Attributable to Magna International 1.41 1.16 2.63 2.28
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Cash dividends paid per common share 0.25 0.22 0.50 0.44
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We seek Safe Harbor.
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