AURORA, Ontario, August 7, 2015 /PRNewswire/ --
Magna International Inc. (TSX: MG; NYSE: MGA) today
reported financial results for the second quarter ended
June 30, 2015.
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2015 2014 2015 2014
Sales $ 8,133 $ 8,911 $ 15,905 $ 17,366
Adjusted EBIT(1) $ 677 $ 722 $ 1,308 $ 1,340
Income from continuing
operations before
income taxes $ 726 $ 704 $ 1,347 $ 1,298
Net income from
continuing operations
attributable to Magna
International Inc. $ 538 $ 519 $ 993 $ 921
Diluted earnings
per share from
continuing operations $ 1.29 $ 1.18 $ 2.39 $ 2.08
All results are reported in millions of U.S. dollars, except per share figures,
which are in U.S. dollars.
(1) Adjusted EBIT is the measure of segment profit or loss as reported in the Company's
attached unaudited interim consolidated financial statements.
Adjusted EBIT represents income from operations before income taxes; interest
expense, net; and other expense, net.
BASIS OF PRESENTATION
In the second quarter of 2015, we signed an agreement to sell
substantially all of our interiors operations to Grupo Antolin, a leading global supplier of
automotive interior systems. The purchase price for the operations,
excluding certain assets, is approximately $525 million, subject to customary closing
adjustments. We will continue managing our seating operations which
are not included in this arrangement. The assets and liabilities,
and operating results for the previously reported interiors
operations are presented as discontinued operations, and have
therefore been excluded from continuing operations for all periods
presented in this press release.
THREE MONTHS ENDED JUNE 30,
2015
We posted sales of $8.1 billion
for the second quarter ended June 30,
2015, a decrease of 9% from the second quarter of 2014. The
weakening of certain currencies against our U.S. dollar reporting
currency, in particular the euro and Canadian dollar, had a
significant negative impact on our reported sales for the second
quarter of 2015. Foreign currency translation reduced our sales by
approximately $890 million, as
compared to the second quarter of 2014. Excluding the impact of
foreign currency translation, our sales increased 1% in the second
quarter of 2015, compared to the second quarter of 2014. North
American light vehicle production increased 3% to 4.6 million units
and European light vehicle production increased marginally to 5.4
million units in the second quarter of 2015, compared to the second
quarter of 2014.
Excluding the impact of foreign currency translation, our
complete vehicle assembly sales decreased 8% in the second quarter
of 2015, compared to the second quarter of 2014. Complete vehicle
assembly volumes decreased 17% to approximately 28,500 units.
During the second quarter of 2015, income from continuing
operations before income taxes was $726
million, net income from continuing operations was
$538 million and diluted earnings per
share from continuing operations were $1.29, increases of $22
million, $19 million and
$0.11 respectively, each compared to
the second quarter of 2014.
For the second quarter of 2015, other (income) expense
positively impacted income from continuing operations before income
taxes by $57 million, net income from
continuing operations attributable to Magna International Inc. by
$42 million, and diluted earnings per
share from continuing operations by $0.10, respectively.
For the second quarter of 2014, other (income) expense
negatively impacted income from continuing operations before income
taxes by $11 million, net income from
continuing operations attributable to Magna International Inc. by
$10 million, and diluted earnings per
share from continuing operations by $0.02, respectively.
During the second quarter ended June 30,
2015, we generated cash from operations of $711 million before changes in operating assets
and liabilities, and invested $271
million in operating assets and liabilities. Total
investment activities for the second quarter of 2015 were
$402 million, including $361 million in fixed asset additions and
$41 million in investments and other
assets.
SIX MONTHS ENDED JUNE 30,
2015
We posted sales of $15.9 billion
for the six months ended June 30,
2015, a decrease of 8% from the six months ended
June 30, 2014. The weakening of
certain currencies against our U.S. dollar reporting currency, in
particular the euro and Canadian dollar, had a significant negative
impact on our reported sales for the first six months of 2015.
Foreign currency translation reduced our sales by approximately
$1.7 billion, as compared to the
first six months of 2014. Excluding the impact of foreign currency
translation, our sales increased 2% in the first six months of
2015, compared to the first six months of 2014.
During the six months ended June 30,
2015, vehicle production increased 1% to 8.7 million units
in North America and increased 1%
to 10.6 million units in Europe,
each compared to the first six months of 2014.
Excluding the impact of foreign currency translation, our
complete vehicle assembly sales decreased 10% in the first six
months of 2015, compared to the first six months of 2014. Complete
vehicle assembly volumes decreased 20% to approximately 56,000
units.
During the six months ended June 30,
2015, income from continuing operations before income taxes
was $1.4 billion, net income from
continuing operations was $993
million and diluted earnings per share from continuing
operations were $2.39, increases of
$49 million, $72 million and $0.31, respectively, each compared to the first
six months of 2014.
For the six months ended June 30,
2015, other (income) expense positively impacted income from
continuing operations before income taxes by $57 million, net income from continuing
operations attributable to Magna International Inc. by $42 million, and diluted earnings per share from
continuing operations by $0.10,
respectively.
For the six months ended June 30,
2014, other (income) expense negatively impacted income from
continuing operations before income taxes by $33 million. In addition, for the six months
ended June 30, 2014, other (income)
expense and the impact of the Austrian tax reform together
negatively impacted net income from continuing operations
attributable to Magna International Inc. by $62 million, and diluted earnings per share from
continuing operations by $0.14,
respectively.
During the six months ended June 30,
2015, we generated cash from operations before changes in
operating assets and liabilities of $1.3
billion, and invested $620
million in operating assets and liabilities. Total
investment activities for the first six months of 2015 were
$706 million, including $627 million in fixed asset additions,
$78 million in investments and other
assets and $1 million to purchase
subsidiaries.
A more detailed discussion of our consolidated financial results
for the second quarter and six months ended June 30, 2015 is contained in the Management's
Discussion and Analysis of Results of Operations and Financial
Position and the unaudited interim consolidated financial
statements and notes thereto, which are attached to this Press
Release.
DIVIDENDS
Yesterday, our Board of Directors declared a quarterly dividend
of $0.22 with respect to our
outstanding Common Shares for the quarter ended June 30, 2015. This dividend is payable on
September 11, 2015 to shareholders of
record on August 28, 2015.
UPDATED 2015 OUTLOOK
The table below reflects our 2015 outlook and 2014 actual
results, both from continuing operations:
2015 Outlook 2014 Actual
Light Vehicle Production (Units)
North America 17.4 million 17.0 million
Europe 20.3 million 20.1 million
Production Sales
North America $17.3 - $17.9 billion $17.4 billion
Europe $6.8 - $7.2 billion $8.8 billion
Asia $1.6 - $1.8 billion $1.6 billion
Rest of World $0.5 - $0.6 billion $0.7 billion
Total Production Sales $26.2 - $27.5 billion $28.5 billion
Complete Vehicle Assembly Sales $2.2 - $2.5 billion $3.2 billion
Total Sales $30.9 - $32.6 billion $34.4 billion
Operating Margin(1) Approximately 8% 7.7%
Tax Rate(1) Approximately 26% 25.0%
Capital Spending $1.3 - $1.5 billion $1.5 billion
(1) Excluding other (income) expense, net
In this 2015 outlook, in addition to 2015 light vehicle
production, we have assumed no material acquisitions or
divestitures other than the divestiture of substantially all of our
interior operations as discussed above. In addition, we have
assumed that foreign exchange rates for the most common currencies
in which we conduct business relative to our U.S. dollar reporting
currency will approximate current rates.
ABOUT MAGNA
We are a leading global automotive supplier with 319
manufacturing operations and 85 product development, engineering
and sales centres in 29 countries. We have over 136,000 employees
focused on delivering superior value to our customers through
innovative products and processes, and World Class Manufacturing.
Our product capabilities include producing body, chassis, interior,
exterior, seating, powertrain, electronic, vision, closure and roof
systems and modules, as well as complete vehicle engineering and
contract manufacturing. Our Common Shares trade on the Toronto
Stock Exchange (MG) and the New York Stock Exchange (MGA). For
further information about Magna, visit our website at
http://www.magna.com.
We will hold a conference call for interested analysts and
shareholders to discuss our second quarter results on Friday, August 7, 2015 at 8:00 a.m. EDT. The conference call will be
chaired by Don Walker, Chief
Executive Officer. The number to use for this call is
1-800-743-9807. The number for overseas callers is 1-416-641-6701.
Please call in at least 10 minutes prior to the call. We
will also webcast the conference call at
http://www.magna.com. The slide presentation accompanying the
conference call will be available on our website Friday morning
prior to the call.
FORWARD-LOOKING STATEMENTS
This press release contains statements that constitute
"forward-looking statements" or "forward-looking information"
within the meaning of applicable securities legislation, including,
but not limited to, statements relating to: Magna's forecasts of
light vehicle production in North
America and Europe;
expected consolidated sales, based on such light vehicle production
volumes; production sales, including expected split by segment, in
its North America, Europe, Asia
and Rest of World segments for 2015; complete vehicle assembly
sales; consolidated operating margin, effective income tax rate;
fixed asset expenditures; and statements relating to the sale of
substantially all of our Interiors operations to Grupo Antolin (the "Grupo Transaction") . The
forward-looking information in this document is presented for the
purpose of providing information about management's current
expectations and plans and such information may not be appropriate
for other purposes. Forward-looking statements may include
financial and other projections, as well as statements regarding
our future plans, objectives or economic performance, or the
assumptions underlying any of the foregoing, and other statements
that are not recitations of historical fact. We use words such as
"may", "would", "could", "should", "will", "likely", "expect",
"anticipate", "believe", "intend", "plan", "forecast", "outlook",
"project", "estimate" and similar expressions suggesting future
outcomes or events to identify forward-looking statements. Any such
forward-looking statements are based on information currently
available to us, and are based on assumptions and analyses made by
us in light of our experience and our perception of historical
trends, current conditions and expected future developments, as
well as other factors we believe are appropriate in the
circumstances. However, whether actual results and developments
will conform with our expectations and predictions is subject to a
number of risks, assumptions and uncertainties, many of which are
beyond our control, and the effects of which can be difficult to
predict, including, without limitation: the impact of economic or
political conditions on consumer confidence, consumer demand for
vehicles and vehicle production; fluctuations in relative currency
values; restructuring, downsizing and/or other significant
non-recurring costs; continued underperformance of one or more of
our operating Divisions; our ability to successfully launch
material new or takeover business; shifts in market share away from
our top customers; inability to grow our business with OEMs; shifts
in market shares among vehicles or vehicle segments, or shifts away
from vehicles on which we have significant content; a prolonged
disruption in the supply of components to us from our suppliers;
shutdown of our or our customers' or sub-suppliers' production
facilities due to a labour disruption; scheduled shutdowns of our
customers' production facilities (typically in the third and fourth
quarters of each calendar year); our ability to successfully
compete with other automotive suppliers; reduction in outsourcing
by our customers or the loss of a material production or assembly
program; the termination or non-renewal by our customers of any
material production purchase order; impairment charges related to
goodwill and long-lived assets; exposure to, and ability to offset,
volatile commodities prices; risk of production disruptions due to
natural disasters or other catastrophic events; the security and
reliability of our IT systems; legal claims and/or regulatory
actions against us, including the ongoing antitrust investigations
being conducted by German and Brazilian authorities; changes in our
mix of earnings between jurisdictions with lower tax rates and
those with higher tax rates, as well as our ability to fully
benefit tax losses; other potential tax exposures; changes in
credit ratings assigned to us; the consummation of the Grupo
Transaction; the satisfaction or waiver of conditions to complete
the Grupo Transaction, including obtaining required regulatory
approvals; warranty or indemnity obligations to the purchaser in
the Grupo Transaction in relation to pre-closing liabilities; our
ability to successfully identify, complete and integrate
acquisitions or achieve anticipated synergies; our ability to
conduct appropriate due diligence on acquisition targets; risks of
conducting business in foreign markets, including China, India,
Russia, Eastern Europe, Thailand, Brazil, Argentina and other non-traditional markets
for us; ongoing pricing pressures, including our ability to offset
price concessions demanded by our customers; our ability to
consistently develop innovative products or processes; warranty and
recall costs; pension liabilities; changes in laws and governmental
regulations; costs associated with compliance with environmental
laws and regulations; liquidity risks as a result of an
unanticipated deterioration of economic conditions; our ability to
achieve future investment returns that equal or exceed past
returns; the unpredictability of, and fluctuation in, the trading
price of our Common Shares; and other factors set out in our Annual
Information Form filed with securities commissions in Canada and our annual report on Form 40-F
filed with the United States Securities and Exchange Commission,
and subsequent filings. In evaluating forward-looking statements,
we caution readers not to place undue reliance on any
forward-looking statements and readers should specifically consider
the various factors which could cause actual events or results to
differ materially from those indicated by such forward-looking
statements. Unless otherwise required by applicable securities
laws, we do not intend, nor do we undertake any obligation, to
update or revise any forward-looking statements to reflect
subsequent information, events, results or circumstances or
otherwise.
For further information about Magna, please see our website at
http://www.magna.com. Copies of financial data and other publicly
filed documents are available through the internet on the Canadian
Securities Administrators' System for Electronic Document Analysis
and Retrieval (SEDAR) which can be accessed at http://www.sedar.com
and on the United States Securities and Exchange Commission's
Electronic Data Gathering, Analysis and Retrieval System (EDGAR)
which can be accessed at http://www.sec.gov
For further information, please contact Louis Tonelli, Vice-President, Investor
Relations at 905-726-7035.
For teleconferencing questions, please contact Nancy Hansford at +1-905-726-7108.