* Q2 EPS $1.48 vs year earlier $1.15
* Revenue 5 pct higher to record $7.7 billion
* To buy controlling stake in E-Car Systems for $74.67 mln
By Susan Taylor
TORONTO, Aug 9 (Reuters) - Magna International Inc, one of the world's biggest auto parts manufacturers, reported a 24 percent jump in quarterly profit on Thursday and said it was buying the controlling, minority stake in its electric car business.
That $74.67 million acquisition, from a company affiliated with controversial Magna founder Frank Stronach, is expected to close in a matter of weeks and end Stronach's involvement in the venture.
The auto parts giant paid Stronach roughly $900 million in 2010 to cede control of the company. The buyout deal also put Stronach at the helm of a joint venture between Magna and the Stronach Trust to make electric and hybrid vehicles and parts for other customers.
"We are pleased to regain control of Magna E-Car's assets and business," said Magna CEO Don Walker.
"We expect hybrid and electric vehicle production to continue to grow globally in the future and we believe that Magna stands to benefit from this trend by supplying ... components, systems and engineering services to our customers."
Magna, which currently owns a 73 percent, non-controlling stake in the Magna E-Car System partnership, said it will buy the controlling 27 percent stake in a cash deal.
The operation lost some $30 million in the first half of 2012, but the company said it expects lower losses in the next six months on overhead savings as it folds the business into Magna operations.
Magna said its second-quarter earnings rose to $349 million, or $1.48 a share, compared with profit of $282 million, or $1.15 a share, in the same period last year.
The company, which makes parts for major auto manufacturers and assembles complete vehicles, said revenue increased to $7.7 billion from $7.3 billion in the period ended June.
Analysts, on average, had expected earnings of $1.28 a share and revenue of $7.5 billion, according to Thomson Reuters I/B/E/S.
The company also modestly revised its 2012 operating margin to the "low to mid 5 percent range", from its previous forecast in the "low 5 percent range." It maintained its total sales outlook of between $29 billion and $30.5 billion.
Magna said its complete vehicle assembly sales fell 11 percent to $645 million in the quarter, while volumes were down 6 percent to approximately 33,000 units.
Industry-wide, it said vehicle production increased 28 percent in North America from the year-ago quarter, while declining 7 percent in Europe.
"North America is going strong, Europe is improving with more to come down the road," Walker said on a conference call. "(There is) some work ahead of us in South America, I'm confident we'll get things back on track there as well."
South American operations have been struggling with operating inefficiencies, the company said, along with lower-than-expected production volumes.
Poorly performing European operations continued to make improvements in the quarter, a trend the company has promised will continue through this year.
Europe generated $65 million of adjusted earnings from operations before income taxes, interest expense or other income, compared to a $13 million loss on that basis in the same period last year.
The Aurora, Ontario-based company, which competes against such suppliers as Johnson Controls Inc and TRW Automotive Holding Corp, is working to expand its market beyond North America and Europe into fast-growth areas such as China, Brazil and Eastern Europe.
The company said it continues to look at acquisition opportunities, preferring targets with "good technology" or operations in Asia. Europe may also provide some good deals should the downturn there continue, Walker told analysts.
Canada's second-biggest auto parts maker, Linamar Corp, reported a 51 percent jump in quarterly profit on Wednesday on the back of bigger sales and margins. [ID: nL2E8J8E6O]
Shares of Magna added 29 Canadian cents to close at C$41.79 on the Toronto Stock Exchange on Thursday. Year-to-date, the stock has gained more than 20 percent.