Magna lifts outlook, dividend after topping forecasts
By Solarina Ho
TORONTO (Reuters) - mgCanadian auto parts maker Magna International Inc (MG.TO: Quote) (MGA.N: Quote) raised its full-year sales forecast on Friday and sweetened its quarterly dividend after a fourth-quarter performance that beat expectations.
Shares of Magna, one of the world's largest parts makers, rose after it said its North American operations helped drive total sales last year to a record high. That mirrored a robust, double-digit recovery for vehicle sales in the United States.
The Aurora, Ontario-based company, which is sitting on about $1 billion in cash, also raised its quarterly dividend by 16 percent, to a record 32 cents a share.
"When you put all that together ... the stock is reacting positively on a pretty choppy day in the market," said Todd Coupland, an analyst at CIBC.
Magna shares rose as much as 5.7 percent on Friday. The stock has gained roughly 28 percent in the past six months.
The fortunes of Canadian auto parts makers are tightly tied to the Detroit Three and the health of the U.S. vehicle market, and the parts makers have benefited from the steady recovery of Ford Motor Co (F.N: Quote), General Motors Co (GM.N: Quote) and Fiat SpA's Chrysler FIA.MI from their recession-induced slump.
Coupland said the outlook is positive, particularly in light of U.S. figures released on Friday that showed the auto industry was on track for a fourth straight month of strong sales.
"People are saying the strength that we saw in 2012 can't continue, yet it has so far in 2013 and the reason is you're getting a kicker, or a tailwind from better (U.S.) housing starts," he said. Continued...