Magna International reported financial results for the second quarter and first half ended 30 June, 2020 with significant operating losses, as expected.
Light vehicle production in North America and Europe, the supplier and contract vehicle assembler’s most significant markets, were down 70% and 59%, respectively in the second quarter while global light vehicle production was down 42%.
Magna estimated Q2 COVID-19 impacts of approximately US$5.5bn on sales and $1.2bn on both income from operations before income taxes and adjusted EBIT.
Sales fell 58% to $4.3bn and the loss per share of $2.17 compared to earnings of $1.42 in Q2 2019.
CEO Don Walker said: “While our second quarter results were impacted by a precipitous decline in global vehicle production caused by the COVID-19 pandemic, I am pleased we have been able to successfully and safely restart operations at our plants around the world.
“Additionally, we have taken several actions across the company to reduce our cost structure to be aligned with our updated expectations for future vehicle production.
“We expect our second half 2020 results to begin to reflect these actions. I am confident that Magna will emerge from the recent economic upheaval as strong as ever.”
Magna said North America and Europe experienced Q2 vehicle production declines compared to Q2 2019 that, both in percentage and absolute volume terms, far exceeded the worst comparable quarterly declines experienced during the 2008-2009 financial crisis.
For the first half, it estimated lost sales of $6.6bn and adjusted EBIT impacted by approximately $1.45bn.
Adjusted EBIT was a loss of $600m compared to a $677 profit in Q2 2019.
Pretax operating loss was $789m compared to $595m proft in the second quarter of 2019.
Included in this were other expenses totaling $168m comprised of restructuring and impairment costs compared to $68m in the second quarter of 2019.
The net loss was $647m compared to $452m profit.
Sales fell 37% to $12.95bn as global light vehicle production fell 33%, reflecting declines of 40% and 39% in North America and Europe, respectively, and a decline of 23% in China.
Pretax operating loss was $403m, net loss $386m and loss per share $1.29, down $2.4bn, $1.9bn and $6.12, respectively.
Adjusted EBIT decreased to a loss of $197m, and loss per share fell to $0.83.
CFO Vince Galifi said: “The second quarter of 2020 was among the most challenging that the auto industry has ever faced, resulting in our first normalised operating loss in over a decade.
“Nevertheless, we took important steps operationally and financially in the quarter to further strengthen our business.
“Our updated 2020 financial outlook reflects our expectations of a solid recovery in earnings and cash flow in the second half of this year.”