(Reuters) - Auto parts maker Magna International Inc MG.TO cut its full-year financial outlook, after quarterly sales missed estimates on Friday due to a fall in global automobile production and a labor strike at General Motors Co GM.N, its biggest customer.
Slowing global economy amid the U.S.-China trade war has hurt consumer sentiment that has weighed on auto sales, while trade tariffs on metals have pushed vehicle production costs up by billions of dollars, hurting automakers and parts suppliers’ profitability.
A 40-day strike at the No.1 U.S. carmaker, General Motors, has added to auto parts makers’ pain, in the form of lost revenue.
Magna, which makes parts such as body structures, chassis and powertrain for customers including Ford Motor F.N and Volkswagen VOWG_p.DE, cut its 2019 sales outlook to between $38.7 billion and $39.8 billion, from its previous range of $38.9 billion to $41.1 billion, largely due to the strike at GM.
The company now expects full-year net income between $1.8 billion and $1.9 billion, down from its prior range of $1.9 billion and $2.1 billion.
“We have made some adjustments to our outlook largely to reflect estimated lost volume related to the GM strike and higher launch costs,” Chief Financial Officer Vince Galifi said.
Several auto parts makers and suppliers have lowered their full-year forecasts and disclosed hits to quarterly earnings due to the strike.
Earlier this month drivetrain systems maker American Axle and Manufacturing Holdings AXL.N said the strike reduced third-quarter sales by $57 million, and warned of an about $250 million hit to full-year revenue.
Aptiv Plc APTV.N said last month the strike knocked off $70 million from the company's quarterly revenue and reduced profit by 10 cents per share in the third quarter.
Magna recorded non-cash impairment charges of $537 million after income taxes in the third quarter ended Sept. 30 and reported adjusted earnings before interest and taxes of $558 million, below analysts’ expectation of $572 million, according to IBES data from Refinitiv.
Total sales fell 3% to $9.32 billion, missing the Wall Street estimate of $9.33 billion.
(The story corrects day in first paragraph to Friday from Thursday.)
Reporting by Ankit Ajmera in Bengaluru; Editing by Anil D’Silva and Shinjini Ganguli
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