Aurora Ontario-based auto partsmaker and contract vehicle assembler Magna International saw reduced operating and net income during the second quarter of 2011 on sales up 24%.
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Operating income was US$362m, net income $282m and earnings per share $1.15, decreases of $5m, $12m and $0.15, respectively, year on year.
Magna cited operational inefficiencies and other costs, in particular at its exteriors and interiors systems business in Europe, higher commodity costs, new facility costs incurred to support growth, as well as the favourable settlement of commercial items during the second quarter, adding the costs more than offset the operating income earned on the increased sales.
Sales across all business sectors rose 24% to $7.3bn in a period when vehicle production increased 2% in western Europe and was essentially flat in North America.
Complete vehicle assembly sales increased 23% to $728m on complete vehicle assembly volumes up 57% to approximately 35,000 units.
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By GlobalDataOn the other hand, first half profits to 30 June rose on sales up 29% to $14.5bn. Operating income was $762m, net income $604m and earnings per share $2.45, increases of $117m, $86m and $0.16, respectively.
Vehicle production increased 8% to 6.5m units in North America and 6% to 7.3m in western Europe.
Magna’s complete vehicle assembly sales increased 35% to $1.4bn and volumes increased 70% to about 68,500 units.
Magma will pay a quarterly dividend of $0.25 on 15 September.
Its revised 2011 full year outlook expects North America output of 13m units and 13.6m in western Europe. It expects sales of $13.2 – $13.7bn in North America, $8.3 – $8.6bn in westrn Europe and $1.3 – $1.5bn elsewhere for a total of $22.8 – $23.8bn. Assembly sales of $2.6 – $2.9bn are forecast. Operating margin is pegged at 5%.
“Our top priority continues to be the improvement of our underperforming operations in Europe,” Magna said. “Based on our current plans, we expect to see an improvement in operating results, excluding unusual items, for both our exteriors and interiors business and our Europe segment in general, in the second half of this year, along with further improvement beyond 2011.”
