By Jeff Bennett And Judy McKinnon
The finance chief of Magna International Inc. said the Canadian
auto parts maker remains interested in building another car
assembly plant but only if it could secure enough long-term demand
to support such a move.
Chief Financial Officer Vincent Galifi said Magna is open to
locating a plant in North America, Europe or Asia that would build
niche vehicles provided it could secure enough long-term orders
before breaking ground.
"There would have to be enough critical mass," Mr. Galifi said
during an interview Wednesday.
Magna's willingness to build a plant comes as tech giant Apple
Inc. is developing its own electric car, reportedly with an eye
toward production in 2020. The Cupertino, Calif., company has
several hundred employees working toward creating an Apple-branded
electric vehicle that is code-named "Titan," The Wall Street
Journal reported earlier this month.
One of the biggest challenges, however, is that Apple has no
production facilities to support mass car production.
Magna, however, has been building entire vehicles for different
auto makers at its Magna Steyr plant in Austria since 2001. The
plant, which produces such vehicles as the Mercedes-Benz G-Class,
assembled 135,126 vehicles last year and generated sales of $3.07
billion.
"If I were to just come to you and say I want to make a Ravi
Shanker branded automobile, can you just do everything for me or
what is it that Magna Steyr can do or not do?" Morgan Stanley
analyst Ravi Shanker asked of Magna CEO Donald Walker during the
company's fourth quarter earnings call Wednesday.
"Well, from a manufacturing standpoint, we have a complete
assembly plan over there, which is the body shop, the paint shop
and general assembly from which we do multiple vehicles," Mr.
Walker said. "From an engineering standpoint, Magna can engineer
and complete vehicles."
Morningstar Inc. analyst Richard Hilgert said Apple teaming with
Magna makes sense since the auto parts company has the "design and
tooling" capacities to also help get Apple to the market
faster.
Canaccord Genuity analyst David Tyerman also sees a scenario in
which Magna builds Apple cars at its Austria plant.
"Its more of a plug and play," he said. "Magna already has the
excess capacity at the Steyr plant, they have the paint line, the
tools and it's a large site. The only question is will they want to
import the cars to the U.S."
Mr. Galifi declined to comment on whether the company has held
any discussions with Apple in terms of car production.
Magna does have the financial wherewithal to open a new factory.
For the fourth quarter, Magna's quarterly rose 11% to $509 million,
or $2.44 a share, handily beating the $2.24-a-share analysts polled
by Thomson Reuters were expecting. The company raised its dividend
and announced plans to split its shares on a 2-for-1 basis. It
finished the year with $1.25 billion in cash and had operating
lines of credit totaling $2.57 billion.
The company offered guidance for 2015 total sales of $33.1
billion to $34.8 billion, below both 2014 sales of $36.64 billion
and the $36.22 billion analysts are forecasting.
Write to Jeff Bennett at jeff.bennett@wsj.com and Judy McKinnon
at judy.mckinnon@wsj.com
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