Magna boosts sales forecast as profit rises
By Susan Taylor
TORONTO (Reuters) - Magna International Inc posted market-beating quarterly results on Thursday and boosted its sales and margin forecasts, fueled by rebounding vehicle production in its key North American market and improving European operations.
Shares in Magna, one of the world's biggest auto parts manufacturers, jumped as much as 7.5 percent after the results were announced before slipping back to a gain of 2.2 percent.
Magna raised its total sales outlook for 2012 to between $29.0 billion and $30.5 billion, up from its previous forecast of $28.0 billion to $29.5 billion.
The company, which had sales of $28.7 billion last year, also announced surprisingly healthy results from its European operations, where inefficient plants had produced a string of quarterly losses on a regional basis.
BMO Capital Markets analyst Peter Sklar had expected the European segment to break even, but operating income rose to $63 million in the quarter ended March 31, from $29 million last year, even as industry-wide vehicle production fell 7 percent in Western Europe.
Vehicle production in North American jumped 17 percent.
"North American results moderately exceeded our estimate, but Europe finally climbed solidly into the black following a number of quarters of losses," Sklar said in a note to clients.
Chief Executive Don Walker said Magna's European operations have "turned the corner", but still have "a ways to go". Continued...