TORONTO (Reuters) - Auto-parts maker Magna International Inc MGa.TO reported a 13 percent drop in quarterly earnings on Wednesday as sales slipped, and it scaled back its expectations for 2008 light vehicle production in North America by about 1 million units.
The company said net earnings fell to $227 million, or $1.98 a diluted share, in the quarter ended June 30, from $262 million, or $2.35 a share, in the year-before period.
But profit was better than expected, with analysts anticipating earnings of $1.83 a share, according to Reuters Estimates, sending Magna’s class A shares up 2.8 percent.
Magna said its quarterly sales edged down to $6.71 billion from $6.73 billion, but still beat analyst forecasts for $6.55 billion.
It said increases in its European and “rest-of-world” production sales were offset by reductions in North American production sales, complete vehicle assembly sales and tooling, engineering and other sales.
The Aurora, Ontario-based company “significantly” cut its expectations for 2008 light vehicle production volumes in North America.
Magna now expects 13.2 million cars and light trucks to be made in North America this year, and about 15.6 million units in Europe.
It likewise trimmed its expectations for 2008 consolidated sales, saying it now expects sales of between $24.3 billion and $25.6 billion for the full year.
In May, the company saw 2008 consolidated sales in a range of $25.5 billion to $26.8 billion, based on full-year 2008 light vehicle production volumes of 14.2 million in North America and 15.6 million in Europe.
In a conference call with investors, Co-Chief Executive Donald Walker acknowledged the tough environment in the North American auto industry, calling it “among the most challenging times we have experienced in the last 20 years.”
However, he said that Magna has seen some success in its efforts to become less dependent on the North American market, noting that sales and operating income in its European operations surpassed North America for the first quarter ever.
Walker said the company is considering additional acquisitions in Russia in order to gain capacity on the ground and to capitalize on the current weakness of some of its competitors.
Shares of Magna closed up C$1.75 at C$64.04.
Reporting by Lynne Olver and Leah Schnurr; editing by Rob Wilson