Magna Announces Second Quarter and Year to Date Results
AURORA, ON--August 10, 2012:
Magna International Inc. (TSX: MG; NYSE: MGA) today reported financial results for the second quarter ended June 30, 2012.
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 2012 2011 2012 2011 Sales $ 7,727 $ 7,338 $ 15,393 $ 14,527 Income from operations before income taxes $ 470 $ 362 $ 909 $ 762 Net income attributable to Magna International Inc. $ 349 $ 282 $ 692 $ 604 Diluted earnings per share $ 1.48 $ 1.15 $ 2.94 $ 2.46
All results are reported in millions of U.S. dollars, except per share figures, which are in U.S. dollars.
THREE MONTHS ENDED JUNE 30, 2012
We posted record sales of $7.7 billion for the second quarter ended June 30, 2012, an increase of 5% from the second quarter of 2011. We achieved this sales increase in a period when vehicle production increased 28% in North America and declined 7% in Western Europe, both relative to the second quarter of 2011. In the second quarter of 2012, our North American and Rest of World production sales, as well as tooling, engineering and other sales increased, while European production sales and complete vehicle assembly sales decreased, in each case relative to the comparable quarter in 2011.
Complete vehicle assembly sales decreased 11% to $645 million for the second quarter of 2012 compared to $728 million for the second quarter of 2011, while complete vehicle assembly volumes decreased 6% to approximately 33,000 units.
During the second quarter of 2012, income from operations before income taxes was $470 million, net income attributable to Magna International Inc. was $349 million and diluted earnings per share were $1.48, increases of $108 million, $67 million and $0.33, respectively, each compared to the second quarter of 2011.
During the second quarter ended June 30, 2012, we generated cash from operations of $586 million before changes in non-cash operating assets and liabilities, and invested $122 million in non-cash operating assets and liabilities. Total investment activities for the second quarter of 2012 were $283 million, including $267 million in fixed asset additions and $35 million in investments and other assets.
SIX MONTHS ENDED JUNE 30, 2012
We posted sales of $15.4 billion for the six months ended June 30, 2012, an increase of 6% from the six months ended June 30, 2011. This higher sales level reflected increases in our North American, European and Rest of World production sales, partially offset by lower complete vehicle assembly sales and tooling, engineering and other sales.
During the six months ended June 30, 2012, vehicle production increased 23% to 7.9 million units in North America and decreased 7% to 6.8 million units in Western Europe, each compared to the first six months of 2011.
Complete vehicle assembly sales decreased 11% to $1.2 billion for the six months ended June 30, 2012 compared to $1.4 billion for the six months ended June 30, 2011, while complete vehicle assembly volumes decreased 8% to approximately 63,000 units.
During the six months ended June 30, 2012, income from operations before income taxes was $909 million, net income attributable to Magna International Inc. was $692 million and diluted earnings per share were $2.94, increases of $147 million, $88 million and $0.48, respectively, each compared to the first six months of 2011.
During the six months ended June 30, 2012, we generated cash from operations before changes in non-cash operating assets and liabilities of $1.1 billion, and invested $424 million in non-cash operating assets and liabilities. Total investment activities for the first six months of 2012 were $609 million, including $517 million in fixed asset additions, a $69 million increase in investments and other assets and $23 million to purchase subsidiaries.
A more detailed discussion of our consolidated financial results for the second quarter and six months ended June 30, 2012 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.
The Company has reached an agreement to purchase from a company affiliated with the Stronach Group the controlling 27% partnership interest in the Magna E-Car Systems L.P. ("E-Car") partnership for a cash purchase price of $74.67 million. The Company currently owns the remaining 73% non-controlling interest in E-Car. The purchase was reviewed, negotiated and approved by the Company's independent directors with the benefit of independent legal advice from Fasken Martineau DuMoulin LLP, independent financial advice from TD Securities Inc. ("TD") and an independent valuation prepared by PricewaterhouseCoopers LLP ("PwC"). The purchase price represents the midpoint of the valuation range determined by PwC. TD has delivered a fairness opinion to the independent directors to the effect that the transaction is fair, from a financial point of view, to the Company.
Don Walker, Magna's Chief Executive Officer commented: "We are pleased to regain control of Magna E-Car's assets and business, which will be absorbed within our existing operating units. We expect hybrid and electric vehicle ("H/EV") production to continue to grow globally in the future, and we believe that Magna stands to benefit from this trend by supplying H/EV components, systems and engineering services to our customers."
Today, our Board of Directors declared a quarterly dividend of $0.275 with respect to our outstanding Common Shares for the quarter ended June 30, 2012. This dividend is payable on September 14, 2012 to shareholders of record on August 31, 2012.
UPDATED 2012 OUTLOOK
Vehicle Production Units (millions) North America 14.8 Western Europe 12.6 Production Sales ($ billions) North America 14.5 - 15.0 Europe 8.4 - 8.7 Rest of World 1.7 - 2.0 Total Production Sales 24.6 - 25.7 Complete Vehicle Assembly Sales ($ billions) 2.3 - 2.6 Total Sales ($ billions) 29.0 - 30.5 Low to mid 5% Operating Margin* range Approximately Tax Rate* 25% Capital Spending ($ billions) 1.4 - 1.5 * Excluding other income, net (unusual items)
In this 2012 outlook, in addition to 2012 light vehicle production, we have assumed no material acquisitions or divestitures. 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.
We are a leading global automotive supplier with 296 manufacturing operations and 88 product development, engineering and sales centres in 26 countries. Our 115,000 employees are focused on delivering superior value to our customers through innovative processes and World Class Manufacturing. Our product capabilities include body, chassis, interiors, exteriors, seating, powertrain, electronics, mirrors, closures 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 Thursday, August 9, 2012 at 6:00 p.m. EDT. The conference call will be chaired by Don Walker, Chief Executive Officer. The number to use for this call is 1-800-699-3715. The number for overseas callers is 1-303-223-2688. 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 Thursday afternoon prior to the call. For further information, please contact Louis Tonelli, Vice-President, Investors Relations at 905-726-7035. For teleconferencing questions, please contact Karin Kaminski at 905-726-7103.
The previous discussion contains statements that constitute "forward-looking statements" within the meaning of applicable securities legislation, including, but not limited to, statements relating to: Magna's expected production sales, based on expected light vehicle production in North America and Western Europe; Magna's expected production sales in the North America, Europe and Rest of World segments; total sales; complete vehicle assembly sales; consolidated operating margin; effective income tax rate; fixed asset expenditures; and the potential benefits, including with respect to electrification of vehicle powertrains, hybrid and electric vehicle production and their associated components and systems, expected to be achieved from the completion of the acquisition of the outstanding 27% interest in Magna E-Car Systems. The forward-looking information in this Press Release 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 potential for a deterioration of economic conditions or an extended period of economic uncertainty; declines in consumer confidence and the impact on production volume levels; risks arising from uncertain economic conditions in Europe, including the potential for a deterioration of sales of our three largest German-based OEM customers; 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; liquidity risks; risks arising due to the failure of a major financial institution; bankruptcy or insolvency of a major customer or supplier; a prolonged disruption in the supply of components to us from our suppliers; scheduled production shutdowns of our customers' production facilites (typically in the third and fourth quarters for each calendar year); shutdown of our or our customers' or sub-suppliers' production facilities due to a labour disruption; our ability to successfully compete with other automotive suppliers; a 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; a shift away from technologies in which we are investing; impairment charges related to goodwill, long-lived assets and deferred tax assets; shifts in market share away from our top customers; shifts in market shares among vehicles or vehicle segments, or shifts away from vehicles on which we have significant content; risks of conducting business in foreign markets, including China, India, Brazi l, Russia and other non-traditional markets for us; exposure to, and ability to offset, volatile commodities prices; fluctuations in relative currency values; our ability to successfully identify, complete and integrate acquisitions or achieve anticipated synergies; ongoing pricing pressures, including our ability to offset price concessions demanded by our customers; warranty and recall costs; our ability to understand and compete successfully in non-automotive businesses in which we pursue opportunities; risks related to natural disasters and potential production disruptions; factors that could cause an increase in our pension funding obligations; 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; legal claims and/or regulatory actions against us; the unpredictability of, and fluctuation in, the trading price of our Common Shares; work stoppages and labour relations disputes; changes in credit ratings assigned to us; changes in laws and governmental regulations; costs associated with compliance with environmental laws and regulations; risks related to the electric vehicle industry itself; 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.