Magna Announces Fourth Quarter 2020 Results and Outlook

Fourth Quarter 2020 HighlightsSales of $10.6 billion increased 12%, compared to higher global light vehicle production of 4%Diluted earnings per share of $2.45, compared to $1.43 in the fourth quarter of 2019Adjusted diluted earnings per share of $2.83, more than double the fourth quarter of 2019Cash from operating activities of $2.3 billion, compared to $1.7 billion in the fourth quarter of 2019Raised quarterly cash dividend by 8% to $0.43 per shareFull Year 2020 HighlightsSales of $32.6 billion decreased 17%, compared to vehicle production declines of 20% and 23% in our most significant production markets of North America and EuropeReturned $659 million to shareholders primarily through dividendsAURORA, Ontario, Feb. 19, 2021 (GLOBE NEWSWIRE) — Magna International Inc. (TSX: MG; NYSE: MGA) today reported financial results for the fourth quarter and year ended December 31, 2020.A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/f13a4d9c-17ff-4acb-a675-8e472efb9d71THREE MONTHS ENDED DECEMBER 31, 2020Sales and Adjusted EBIT came in ahead of our expectations in the fourth quarter of 2020, as vehicle production was better than anticipated and we continued to benefit from strong operating performance. We also benefitted from higher than anticipated equity income.On a consolidated basis, we posted sales of $10.6 billion for the fourth quarter of 2020, an increase of 12% from the fourth quarter of 2019, compared to global light vehicle production that increased 4%, reflecting increases of 3% in each of North America and Europe, and 10% in China.Adjusted EBIT increased to $1.1 billion in the fourth quarter of 2020 compared to $590 million in the fourth quarter of 2019. The increase mainly reflected margin earned on higher sales, improved productivity, cost savings and efficiencies realized, including as a result of restructuring actions, and the negative impact of the labour strike at General Motors in the fourth quarter of 2019.Income from operations before income taxes was $973 million for the fourth quarter of 2020 compared to $579 million in the fourth quarter of 2019. Included in income from operations before income taxes in the fourth quarter of 2020 was Other expense, net of $100 million, comprised of restructuring and impairment costs and a loss on the sale of an equity-accounted investment, partially offset by net gains on the revaluation of certain private equity investments, compared to Other income, net of $8 million in the fourth quarter of 2019, substantially comprised of net gains on the revaluation of certain private equity investments, partially offset by restructuring costs. Excluding Other expense (income), net from both periods, income from operations before income taxes increased $502 million in the fourth quarter of 2020 compared to the fourth quarter of 2019.Net income attributable to Magna International Inc. was $738 million for the fourth quarter of 2020 compared to $440 million in the fourth quarter of 2019. Included in net income attributable to Magna International Inc. in the fourth quarter of 2020 was Other expense, net of $113 million after tax, compared to Other income, net of $7 million in the fourth quarter of 2019. Excluding Other expense (income), net from both periods, net income attributable to Magna International Inc. increased $418 million in the fourth quarter of 2020 compared to the fourth quarter of 2019.Diluted earnings per share increased to $2.45 in the fourth quarter of 2020, compared to $1.43 in the comparable period. Adjusted diluted earnings per share increased 101% to $2.83 compared to $1.41 for the fourth quarter of 2019.In the fourth quarter of 2020, we generated $2.3 billion in cash from operating activities after changes in operating assets and liabilities. Investment activities for the fourth quarter of 2020 included $560 million in fixed asset additions, $98 million for investments, other assets and intangible assets, and $18 million in private equity investments. We also assumed cash of $98 million related to a business combination.YEAR ENDED DECEMBER 31, 2020We posted sales of $32.6 billion for the year ended December 31, 2020, a decrease of 17% from the year ended December 31, 2019. This is compared to global light vehicle production which decreased 17% in 2020 compared to 2019, largely due to the COVID-19 pandemic and related restrictions that resulted in the temporary suspension of production at substantially all OEM and supplier production facilities in the first half of 2020. Vehicle production declined 20% and 23% in our most significant production markets of North America and Europe, respectively, and declined 4% in China.  Adjusted EBIT decreased to $1.68 billion in 2020, compared to $2.55 billion for 2019. The decrease was primarily as a result of reduced earnings due to lower sales, partially offset by cost savings and efficiencies realized, including as a result of restructuring actions, and the negative impact of the labour strike at General Motors in 2019.During 2020, income from operations before income taxes was $1.0 billion and net income attributable to Magna International Inc. was $757 million, down $1.2 billion and $1.0 billion, respectively, each compared to 2019.Diluted earnings per share decreased to $2.52 for 2020, compared to $5.59 for 2019. Our adjusted diluted earnings per share decreased 35% to $3.95 for 2020 compared to $6.05 for 2019.
  
During 2020, we generated cash from operations of $3.3 billion including changes in operating assets and liabilities. Investment activities for 2020 included $1.15 billion in fixed asset additions, $331 million in investments, other assets and intangible assets, and $132 million in private equity investments, primarily related to Waymo. We also assumed net cash of $91 million related to business combinations.
RETURN OF CAPITAL TO SHAREHOLDERSDuring the three months and year ended December 31, 2020, we paid dividends of $115 million and $467 million, respectively. In addition, we repurchased 4.8 million shares for cancellation for $192 million in the first quarter of 2020.Our Board of Directors declared a fourth quarter dividend of $0.43 per Common Share. This represents an 8% increase in the dividend. The dividend is payable on March 19, 2021 to shareholders of record as of the close of business on March 5, 2021.A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/6c30d392-2723-45de-a89c-6a485ac5b3892021 AND 2023 OUTLOOKOur current year Outlook is provided annually and updated quarterly; our 2023 Outlook is provided below, but not updated quarterly.2021 and 2023 Outlook Assumptions2021 and 2023 OutlookOur Outlook is intended to provide information about management’s current expectations and plans and may not be appropriate for other purposes. Although considered reasonable by Magna as of the date of this document, the 2021 and 2023 Outlook above and the underlying assumptions may prove to be inaccurate. Accordingly, our actual results could differ materially from our expectations as set forth herein. The risks identified in the “Forward-Looking Statements” section below represent the primary factors which we believe could cause actual results to differ materially from our expectations.Key Drivers of Our BusinessOur operating results are primarily dependent on the levels of North American, European and Chinese car and light truck production by our customers. While we supply systems and components to every major original equipment manufacturer [“OEM”], we do not supply systems and components for every vehicle, nor is the value of our content consistent from one vehicle to the next. As a result, customer and program mix relative to market trends, as well as the value of our content on specific vehicle production programs, are also important drivers of our results.OEM production volumes are generally aligned with vehicle sales levels and thus affected by changes in such levels. Aside from vehicle sales levels, production volumes are typically impacted by a range of factors, including: general economic and political conditions; labour disruptions; free trade arrangements; tariffs; relative currency values; commodities prices; supply chains and infrastructure; availability and relative cost of skilled labour; regulatory considerations, including those related to environmental emissions and safety standards; and other factors. Additionally, COVID-19 can impact vehicle production volumes, including through: mandatory stay-at-home orders which restrict production; elevated employee absenteeism; and supply chain disruptions, such as the semiconductor chip shortage currently impacting global vehicle production volumes.Overall vehicle sales levels are significantly affected by changes in consumer confidence levels, which may in turn be impacted by consumer perceptions and general trends related to the job, housing and stock markets, as well as other macroeconomic and political factors. Other factors which typically impact vehicle sales levels and thus production volumes include: interest rates and/or availability of credit; fuel and energy prices; relative currency values; regulatory restrictions on use of vehicles in certain megacities; and other factors. Additionally, COVID-19 can impact vehicle sales, including through: mandatory stay-at-home orders which restrict operations of car dealerships; and lower consumer confidence due to deterioration in household income.Segment Analysis
[All amounts in U.S. dollars and all tabular amounts in millions unless otherwise noted]
Sales for Body Exteriors & Structures increased 12% or $470 million to $4.39 billion for the fourth quarter of 2020 compared to $3.92 billion in 2019. The increase in sales was primarily due to the negative impact of the labour strike at GM during the fourth quarter of 2019, the launch of new programs during or subsequent to the fourth quarter of 2019, including the Ford Bronco Sport and Mustang Mach E, General Motors full-size SUVs, and Mercedes-Benz GLE Coupe, a $64 million increase in reported U.S. dollar sales primarily as a result of the net strengthening of foreign currencies against the U.S. dollar, as well as the increase in global light vehicle production. These were partially offset by the end of production of certain programs, and net customer price concessions.Adjusted EBIT for Body Exteriors & Structures increased $254 million to $543 million for the fourth quarter of 2020 compared to $289 million for the fourth quarter of 2019 and Adjusted EBIT as a percentage of sales increased 5.0% to 12.4% for the fourth quarter of 2020 compared to 7.4% for the fourth quarter of 2019. The increases reflect improved productivity, cost savings and efficiencies realized, including as a result of restructuring actions, the negative impact of the labour strike at GM during the fourth quarter of 2019 and earnings on higher sales.Sales for Power & Vision increased 17% or $454 million to $3.18 billion for the fourth quarter of 2020 compared to $2.73 billion for the fourth quarter of 2019. The increase in sales was primarily due to the negative impact of the labour strike at GM during the fourth quarter of 2019, the launch of new programs during or subsequent to the fourth quarter of 2019, including the Mercedes-Benz GLB, Land Rover Defender, Genesis G80, and BMW 2-Series Gran Coupe, a $113 million increase in reported U.S. dollar sales primarily as a result of the net strengthening of foreign currencies against the U.S. dollar, as well as the increase in global light vehicle production. These were partially offset by net customer price concessions.Adjusted EBIT for Power & Vision increased $196 million to $359 million for the fourth quarter of 2020 compared to $163 million for the fourth quarter of 2019, and Adjusted EBIT as a percentage of sales increased 5.3% to 11.3%, for the fourth quarter of 2020 compared to 6.0% for the fourth quarter of 2019. The increases were primarily due to earnings on higher sales, cost savings and efficiencies realized, including as a result of restructuring actions, the negative impact of the labour strike at GM during the fourth quarter of 2019, lower engineering costs in our ADAS business, substantially associated with three programs that will be utilizing new technologies, higher equity income and lower spending associated with our former collaboration with Lyft. These were partially offset by lower net favourable commercial items.Sales for Seating Systems declined 3% or $36 million to $1.39 billion for the fourth quarter of 2020 compared to $1.43 billion for the fourth quarter of 2019. This decrease was primarily due to lower production on certain key programs, in particular the Chrysler Minivan, the end of production of certain programs, a $5 million decrease in reported U.S. dollar sales and net customer price concessions. These were partially offset by the launch of new programs during or subsequent to the fourth quarter of 2019, including the BMW 1-Series, BMW 2-Series Gran Coupe, Ford Escape and Audi A3, and the negative impact of the labour strike at GM during the fourth quarter of 2019.Adjusted EBIT for Seating Systems increased $6 million to $85 million for the fourth quarter of 2020 compared to $79 million for the fourth quarter of 2019 and Adjusted EBIT as a percentage of sales increased 0.6% to 6.1% for the fourth quarter of 2020 compared to 5.5% for the fourth quarter of 2019.  The increases were primarily due to cost savings and efficiencies realized, including as a result of restructuring actions, the negative impact of the labour strike at GM during the fourth quarter of 2019 and productivity and efficiency improvements at an underperforming facility. These were partially offset by lower earnings on the lower sales.Sales for Complete Vehicles increased 20% or $298 million to $1.76 billion for the fourth quarter of 2020 compared to $1.46 billion for the fourth quarter of 2019, and assembly volumes increased 2% or 600 units. This sales increase was primarily due to higher volumes on the Jaguar I-Pace, BMW 5 Series and Mercedes Benz G-Class and a $122 million increase in reported U.S. dollar sales as a result of the strengthening of the euro against the U.S. dollar, partially offset by lower assembly volumes on the Jaguar E-Pace, BMW Z4 and Toyota Supra.Adjusted EBIT for Complete Vehicles increased $66 million to $110 million in the fourth quarter of 2020, and Adjusted EBIT as a percentage of sales improved to 6.3% in the fourth quarter of 2020 compared to 3.0% in the fourth quarter of 2019. The increases were primarily due to higher earnings on engineering sales, favourable program mix, the benefit of a cost cutting initiative, and restructuring and downsizing costs incurred during the fourth quarter of 2019.   
 


Resource News, Oil and Gas News, Mining News, Renewable News

Resource News

Oil, Gas, Mining & Metals

Start typing and press Enter to search

shares