February 26, 2016 / 10:25 AM / in 2 years

Auto parts maker Magna gets boost from Europe, North America demand

(Reuters) - Canadian auto parts maker Magna International Inc (MG.TO) MGA.N reported a much higher-than-expected quarterly profit as low gasoline prices boosted demand for vehicles in Europe and North America.

Magna International Inc Chief Executive Officer Donald Walker speaks to shareholders at the company's annual general meeting in Toronto in this file photo dated May 10, 2012. REUTERS/Fred Thornhill

The company, whose shares were up about 5.5 percent at C$50.68, said it could make more acquisitions, failing which it could buy back more shares.

“It will be interesting to see what happens with the economy and what happens with valuations with public companies that translate into private companies,” Chief Executive Donald Walker said in a post-earnings conference call on Friday.

U.S. auto sales were a record high in 2015, while sales in Europe have also been robust.

Magna, which bought German transmission parts maker Getrag to help automakers’ needs for improved fuel efficiency, has a customer list that includes General Motors Co (GM.N) Volkswagen AG (VOWG_p.DE), BMW (BMWG.DE) and Ford Motor Co (F.N).

Walker said on Friday some of the key areas of focus for the company includes electrification, autonomous driving and new legislation for fuel efficiency.

Aurora, Ontario-based Magna said vehicle production volume rose about 7 percent in Europe and about 4 percent in North America in the fourth quarter ended Dec. 31.

Magna, which gets about half of its revenue from outside North America, said quarterly sales were $8.57 billion, down about 2.5 percent, or about $222 million, from a year earlier.

The strong U.S. dollar reduced sales by about $770 million, excluding which, sales increased 6 percent, said Magna.

The average value of the dollar against a basket of currencies .DXY was 11.7 percent higher in the latest fourth quarter compared with the same quarter a year earlier.

Net income from continuing operations attributable to Magna fell 6.4 percent to $483 million, or $1.19 per share.

On an adjusted basis, it earned $1.22 per share, handily beating analysts’ average estimate of $1.11, according to Thomson Reuters I/B/E/S.

The company, which had $2.9 billion in cash as of Dec. 31, also increased its quarterly cash dividend to 25 cents per share from 22 cents.

Reporting by Amrutha Gayathri in Bengaluru; Editing by Savio D'Souza

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