Magna profit drops 62 percent on Europe woes
TORONTO (Reuters) - Magna International (MG.TO: Quote) MGA.N said on Thursday earnings dropped sharply even as revenue rose, reflecting one-time expenses as well as poor performance and rising costs at its European operations.
Magna, one of the world's biggest auto parts manufacturers, earned $102 million, or 42 cents a share, in the quarter ended September 30, down from $266 million, or $1.14, a year earlier. Sales rose 21 percent to $7 billion.
"Improving results in Europe remains our top priority, and we will continue to take steps to address our underperformance in this region, and are making headway in many plants," said Chief Executive Don Walker on a conference call.
Diluted earnings per share were reduced 52 cents by a $113 million charge associated with disposing of an interior systems operation in Germany, as well as a settlement on a patent infringement claim.
The company also cited operating inefficiencies, particularly at its interiors and exteriors systems business in Europe.
Walker said two facilities in Europe lost $37 million in the third quarter, but that the company expects smaller losses in the fourth quarter and into next year.
For the second quarter in a row, the Aurora, Ontario-based company cut its operating margin forecast for 2011, to about 4.75 percent from about 5 percent.
(Reporting by Allison Martell in Toronto, Bhaswati Mukhopadhyay in Bangalore, and Nicole Mordant in Vancouver; Editing by Frank McGurty)
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