Magna ups dividend, sets stock split as profit jumps
(Reuters) - Auto parts maker Magna International Inc MG.TO MGA.N reported stronger than expected quarterly earnings on Wednesday while announcing a higher dividend and a stock split, sparking a rally in its shares.
Shares of the Canadian-based company jumped 5.2 percent to C$134.30 in early trading in Toronto even though it trimmed its revenue forecast for 2015 due to sluggish European sales.
Magna raised its quarterly dividend to 44 cents a share from 38 cents, and announced a two-for-one stock split. After the split, shareholders will get a dividend of 22 cents a share.
It said the stock split would be implemented through a stock dividend.
Canaccord Genuity analyst David Tyerman said both Magna's sales and margins came in ahead of his forecasts.
"Notable strong performances were on North American and Asian sales and margins," he wrote in a note to clients.
Demand for cars picked up in Europe last year after a six-year slump, boosted by incentive schemes from governments and carmakers. But demand remains below the levels seen before the eurozone crisis as countries in the region struggle to kick-start growth.
Magna cut its 2015 forecast for total production sales, or revenue from its core vehicle parts business, to a range of $28.2 billion-$29.5 billion from $29.2 billion-$30.5 billion. It lowered its forecast for production sales in Europe to $8.3 billion-$8.7 billion from $9.0 billion-$9.4 billion.
The company also cut its total revenue forecast to $33.1 billion-$34.8 billion from $34.4 billion-$36.1 billion. Continued...