Mr. Swamy Kotagiri reports

MAGNA ANNOUNCES THIRD QUARTER 2023 RESULTS

Magna International Inc. has released financial results for the third quarter ended Sept. 30, 2023.

Three months ended Sept. 30, 2023

Magna posted sales of $10.7-billion for the third quarter of 2023, an increase of 15 per cent over the third quarter of 2022, which compares with global light-vehicle production that increased 4 per cent, including 7-per-cent-higher and 14-per-cent-higher production in North America and Europe, respectively, and 2-per-cent-lower production in China. Excluding the impact of foreign currency translation and acquisitions net of divestitures, sales increased 10 per cent, largely reflecting the launch of new programs and higher global light-vehicle production.

Adjusted EBIT (earnings before interest and taxes) increased to $615-million in the third quarter of 2023, compared with $452-million in the third quarter of 2022. The company's continuing focus on operational excellence and cost initiatives helped drive strong earnings on higher sales. In addition, the adjusted EBIT increase mainly reflected higher customer recoveries net of production input costs as well as productivity and efficiency improvements, including lower costs at previously underperforming facilities, partially offset by the net unfavourable impact of commercial items, and acquisitions, net of divestitures.

Income from operations before income taxes increased to $538-million for the third quarter of 2023, compared with $400-million in the third quarter of 2022. Included in income from operations before income taxes were other (income) expense, net items and amortization of acquired intangibles totalling $28-million and $34-million in the third quarters of 2023 and 2022, respectively. Excluding other (income) expense, net and amortization of acquired intangibles from both periods, income from operations before income taxes increased $132-million in the third quarter of 2023 compared with the third quarter of 2022.

Net income attributable to Magna International was $394-million for the third quarter of 2023, compared with $289-million in the third quarter of 2022. Included in net income attributable to Magna International were other (income) expense, net items and amortization of acquired intangibles totalling $25-million after tax and income attributable to non-controlling interests in the third quarter of 2023, compared with $28-million after tax and income attributable to non-controlling interests in the third quarter of 2022. Excluding other (income) expense, net and amortization of acquired intangibles after tax from both periods, net income attributable to Magna International increased $105-million in the third quarter of 2023 compared with the third quarter of 2022.

Diluted earnings per share totalled $1.37 in the third quarter of 2023, compared with $1 in the comparable period. Adjusted diluted earnings per share totalled $1.46, compared with $1.10 for the third quarter of 2022.

In the third quarter of 2023, Magna generated cash from operations before changes in operating assets and liabilities of $797-million and used $24-million in operating assets and liabilities. Investment activities for the third quarter of 2023 included $630-million in fixed-asset additions, $176-million in investments, other assets and intangible assets, and $7-million in private-equity investments.

Nine months ended Sept. 30, 2023

Magna posted sales of $32.3-billion for the nine months ended Sept. 30, 2023, an increase of 14 per cent over the nine months ended Sept. 30, 2022, as global light-vehicle production increased 8 per cent.

Adjusted EBIT increased to $1.7-billion for the nine months ended Sept. 30, 2023, compared with $1.3-billion for the nine months ended Sept. 30, 2022, primarily due to earnings on higher sales, higher customer recoveries net of production input costs, productivity and efficiency improvements, including lower costs at previously underperforming facilities and higher equity income, partially offset by acquisitions, net of divestitures, the net unfavourable impact of commercial items and higher launch, engineering, and other costs associated with the launch of new assembly business.

During the nine months ended Sept. 30, 2023, income from operations before income taxes was $1.3-billion, net income attributable to Magna International was $942-million, and diluted earnings per share totalled $3.29, increases of $564-million, $445-million and $1.59, respectively, each compared with the first nine months of 2022.

During the nine months ended Sept. 30, 2023, adjusted diluted earnings per share increased 26 per cent to $4.15 compared with the first nine months of 2022.

During the nine months ended Sept. 30, 2023, the company generated cash from operations before changes in operating assets and liabilities of $2.27-billion and invested $697-million in operating assets and liabilities. Investment activities for the first nine months of 2023 included $1.48-billion to purchase Veoneer Active Safety, $1.56-billion in fixed-asset additions, a $373-million increase in investments, other assets and intangible assets, and $10-million in public- and private-equity investments.

Return of capital

During the three months ended Sept. 30, 2023, Magna paid $128-million in dividends.

The company has declared a third-quarter dividend of 46 cents per common share, payable on Dec. 1, 2023, to shareholders of record as of the close of business on Nov. 17, 2023.

2023 outlook

Magna first discloses a full-year outlook annually in February, with quarterly updates. The outlook disclosed herein is an update to the company's previous outlook in August, 2023.

The company's outlook reflects the impact of the United Auto Workers labour strike at certain customers.

The company's outlook is intended to provide information about management's current expectations and plans, and may not be appropriate for other purposes. Although considered reasonable by Magna as of the date of this document, the 2023 outlook and the underlying assumptions may prove to be inaccurate. Accordingly, the company's actual results could differ materially from its expectations as set forth herein.

Key drivers of Magna's business

The company's operating results are primarily dependent on the levels of North American, European and Chinese car and light-truck production by its customers. While Magna supplies systems and components to every major original equipment manufacturer (OEM), it does not supply systems and components for every vehicle, nor is the value of its content consistent from one vehicle to the next. As a result, customer and program mix relative to market trends, as well as the value of its content on specific vehicle production programs, are also important drivers of Magna's results.

OEM production volumes are generally aligned with vehicle sales levels and thus affected by changes in such levels. Aside from vehicle sales levels, production volumes are typically impacted by a range of factors, including: general economic and political conditions; labour disruptions; free trade arrangements; tariffs; relative currency values; commodities prices; supply chains and infrastructure; availability and relative cost of skilled labour; regulatory considerations, including those related to environmental emissions and safety standards; and other factors. Additionally, COVID-19 can impact vehicle production volumes, including through: mandatory stay-at-home orders which restrict production; elevated employee absenteeism; and supply-chain disruptions.

Vehicle sales levels are significantly affected by changes in consumer confidence levels, which may in turn be impacted by consumer perceptions and general trends related to the job, housing and stock markets, as well as other macroeconomic and political factors. Other factors which typically impact vehicle sales levels, and thus production volumes, include: interest rates and/or availability of credit; fuel and energy prices; relative currency values; regulatory restrictions on use of vehicles in certain megacities; and other factors. Additionally, COVID-19 can impact vehicle sales, including through mandatory stay-at-home orders which restrict operations of car dealerships, as well as through a deterioration in consumer confidence.

About Magna International Inc.

Magna is more than one of the world's largest suppliers in the automotive space. Magna is a mobility technology company built to innovate, with a global, entrepreneurial-minded team of over 181,000 employees across 344 manufacturing operations and 104 product development, engineering and sales centres spanning 29 countries. With greater than 65 years of expertise, the company's ecosystem of interconnected products, combined with its complete vehicle expertise, uniquely positions it to advance mobility in an expanded transportation landscape.

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