Magna International Inc. (TSX: MG; NYSE: MGA) today reported
financial results for the second quarter ended June 30, 2023.
Please click HERE for full second
quarter MD&A and Financial Statements.
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THREE MONTHS ENDEDJUNE 30, |
|
SIX MONTHS ENDEDJUNE 30, |
|
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2023 |
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|
|
2022 |
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|
2023 |
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|
2022 |
|
Reported |
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|
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|
|
|
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|
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Sales |
|
$ |
10,982 |
|
|
$ |
9,362 |
|
|
$ |
21,655 |
|
|
$ |
19,004 |
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations before income taxes |
|
$ |
483 |
|
|
$ |
(88 |
) |
|
$ |
758 |
|
|
$ |
332 |
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Magna International
Inc. |
|
$ |
339 |
|
|
$ |
(156 |
) |
|
$ |
548 |
|
|
$ |
208 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share |
|
$ |
1.18 |
|
|
$ |
(0.54 |
) |
|
$ |
1.91 |
|
|
$ |
0.70 |
|
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Non-GAAP Financial
Measures(1) |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Adjusted EBIT |
|
$ |
603 |
|
|
$ |
358 |
|
|
$ |
1,040 |
|
|
$ |
865 |
|
|
|
|
|
|
|
|
|
|
Adjusted diluted earnings per share |
|
$ |
1.50 |
|
|
$ |
0.83 |
|
|
$ |
2.61 |
|
|
$ |
2.11 |
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All
results are reported in millions of U.S. dollars, except per share
figures, which are in U.S. dollars |
|
(1) Adjusted EBIT and Adjusted diluted earnings per
share are Non-GAAP financial measures that have no standardized
meaning under U.S. GAAP, and as a result may not be comparable to
the calculation of similar measures by other companies. A
reconciliation of these Non-GAAP financial measures is included in
the back of this press release. |
|
A photo of Swamy Kotagiri, Magna’s Chief
Executive Officer is available
at https://www.globenewswire.com/NewsRoom/AttachmentNg/5e29a8e2-b233-452f-af61-45ffab21c982
THREE MONTHS ENDED JUNE 30, 2023
We posted sales of $11.0 billion for the second
quarter of 2023, an increase of 17% from the second quarter of
2022, which compares to a 15% increase in global light vehicle
production, including 14%, 13% and 21% higher production in North
America, Europe and China, respectively. In addition to higher
global production, our sales benefitted from the launch of new
programs and higher sales in our Complete Vehicles segment, while
the net weakening of foreign currencies against the U.S. dollar
negatively impacted sales.
Adjusted EBIT increased to $603 million in the
second quarter of 2023 compared to $358 million in the second
quarter of 2022. Our focus on operational excellence and cost
initiatives helped drive strong earnings on higher sales. In
addition, the EBIT increase reflects losses in our Russian
facilities during the second quarter of 2022, and commercial items
in the second quarter of 2023 and 2022, which had a net favourable
impact on a year over year basis. These were partially offset by
higher production input costs net of customer recoveries, higher
engineering, launch and other costs, including for new vehicle
assembly business, and acquisitions, net of divestitures subsequent
to the second quarter of 2022.
Income from operations before income taxes was
$483 million for the second quarter of 2023 compared to a loss of
$88 million in the second quarter of 2022, which includes Other
expense, net(2) of $86 million and $426 million in the second
quarters of 2023 and 2022, respectively. Excluding Other expense,
net from both periods, income from operations before income taxes
increased $231 million in the second quarter of 2023 compared to
the second quarter of 2022.
Net income attributable to Magna International
Inc. was $339 million for the second quarter of 2023 compared to a
loss of $156 million in the second quarter of 2022, which includes
Other expense, net(2), after tax of $91 million and $399 million in
the second quarters of 2023 and 2022, respectively. Excluding Other
expense, net, after tax from both periods, net income attributable
to Magna International Inc. increased $187 million in the second
quarter of 2023 compared to the second quarter of 2022.
Diluted earnings per share increased to $1.18 in
the second quarter of 2023, compared to a loss of $0.54 in the
second quarter of 2022, and Adjusted diluted earnings per share
increased 81% to $1.50 in the second quarter of 2023 compared to
$0.83 in the second quarter of 2022.
In the second quarter of 2023, we generated cash
from operations before changes in operating assets and liabilities
of $879 million and used $332 million in operating assets and
liabilities. Investment activities for the second quarter of 2023
included $1.48 billion to acquire Veoneer Active Safety, $502
million in fixed asset additions, a $96 million increase in
investments, other assets and intangible assets, and $3 million in
public and private equity investments.
(2) Other expense, net is comprised
of restructuring and impairment costs and net losses on the
revaluation of certain public company warrants and equity
investments during the three and six months ended June 30, 2022
& 2023. The three and six months ended June 30, 2023 also
includes impairment of an investment and business acquisition
costs. Net Income in Q1 2022 includes a $29 million benefit related
to Adjustments to Deferred Tax Valuation Allowances. A
reconciliation of these Non-GAAP financial measures is included in
the back of this press release.
SIX MONTHS ENDED JUNE 30, 2023
We posted sales of $21.7 billion for the six
months ended June 30, 2023, an increase of 14% from the six months
ended June 30, 2022, as global light vehicle production increased
10%.
Adjusted EBIT increased to $1.04 billion for the
six months ended June 30, 2023 compared to $865 million for the six
months ended June 30, 2022, primarily due to earnings on higher
sales, productivity and efficiency improvements, including lower
costs at certain previously underperforming facilities, and higher
equity income, partially offset by higher engineering, launch and
other costs, including for new assembly business, higher production
input costs net of customer recoveries, and commercial items in the
first six months of 2023 and 2022, which had a net unfavourable
impact on a year over year basis.
During the six months ended June 30, 2023,
income from operations before income taxes was $758 million, net
income attributable to Magna International Inc. was $548 million
and diluted earnings per share was $1.91, increases of $426
million, $340 million, and $1.21, respectively, each compared to
the first six months of 2022.
During the first six months ended June 30, 2023,
Adjusted diluted earnings per share increased 24% to $2.61 compared
to the first six months of 2022.
For the six months ended June 30, 2023, we
generated cash from operations before changes in operating assets
and liabilities of $1.45 billion and used $673 million in operating
assets and liabilities. Investment activities for the six months
ended June 30, 2023 included $1.48 billion to purchase Veoneer
Active Safety, $926 million in fixed asset additions, a $197
million increase in investments, other assets and intangible
assets, and $3 million in public and private equity
investments.
RETURN OF CAPITAL TO SHAREHOLDERS
During the three months ended June 30, 2023, we
paid $129 million in dividends.
Our Board of Directors declared a second quarter
dividend of $0.46 per Common Share, payable on September 1, 2023 to
shareholders of record as of the close of business on August 18,
2023.
SEGMENT SUMMARY
($Millions unless otherwise noted) |
For the three months ended June 30, |
Sales |
|
Adjusted EBIT |
|
|
2023 |
|
|
2022 |
|
|
Change |
|
|
|
2023 |
|
|
2022 |
|
|
Change |
|
Body Exteriors & Structures |
$ |
4,540 |
|
$ |
3,947 |
|
$ |
593 |
|
|
$ |
392 |
|
$ |
191 |
|
$ |
201 |
|
Power & Vision |
|
3,462 |
|
|
2,888 |
|
|
574 |
|
|
|
116 |
|
|
91 |
|
|
25 |
|
Seating Systems |
|
1,603 |
|
|
1,253 |
|
|
350 |
|
|
|
66 |
|
|
2 |
|
|
64 |
|
Complete Vehicles |
|
1,526 |
|
|
1,403 |
|
|
123 |
|
|
|
34 |
|
|
63 |
|
|
(29 |
) |
Corporate and Other |
|
(149 |
) |
|
(129 |
) |
|
(20 |
) |
|
|
(5 |
) |
|
11 |
|
|
(16 |
) |
Total Reportable Segments |
$ |
10,982 |
|
$ |
9,362 |
|
$ |
1,620 |
|
|
$ |
603 |
|
$ |
358 |
|
$ |
245 |
|
|
For the three months ended June 30, |
|
|
Adjusted EBIT as a percentage of
sales |
|
|
|
|
|
|
2023 |
|
|
2022 |
|
Change |
Body Exteriors & Structures |
|
|
|
|
|
8.6 |
% |
|
4.8 |
% |
|
+ 3.8 |
% |
Power & Vision |
|
|
|
|
|
3.4 |
% |
|
3.2 |
% |
|
+ 0.2 |
% |
Seating Systems |
|
|
|
|
|
4.1 |
% |
|
0.2 |
% |
|
+ 3.9 |
% |
Complete Vehicles |
|
|
|
|
|
2.2 |
% |
|
4.5 |
% |
|
- 2.3 |
% |
Consolidated Average |
|
|
|
|
|
5.5 |
% |
|
3.8 |
% |
|
+ 1.7 |
% |
|
|
($Millions unless otherwise noted) |
For the six months ended June 30, |
Sales |
|
Adjusted EBIT |
|
|
2023 |
|
|
2022 |
|
|
Change |
|
|
|
2023 |
|
|
2022 |
|
|
Change |
|
Body Exteriors & Structures |
$ |
8,979 |
|
$ |
8,024 |
|
$ |
955 |
|
|
$ |
662 |
|
$ |
420 |
|
$ |
242 |
|
Power & Vision |
|
6,785 |
|
|
5,934 |
|
|
851 |
|
|
|
200 |
|
|
245 |
|
|
(45 |
) |
Seating Systems |
|
3,089 |
|
|
2,629 |
|
|
460 |
|
|
|
102 |
|
|
51 |
|
|
51 |
|
Complete Vehicles |
|
3,152 |
|
|
2,678 |
|
|
474 |
|
|
|
86 |
|
|
113 |
|
|
(27 |
) |
Corporate and Other |
|
(350 |
) |
|
(261 |
) |
|
(89 |
) |
|
|
(10 |
) |
|
36 |
|
|
(46 |
) |
Total Reportable Segments |
$ |
21,655 |
|
$ |
19,004 |
|
$ |
2,651 |
|
|
$ |
1,040 |
|
$ |
865 |
|
$ |
175 |
|
|
For the six months ended June 30, |
|
|
Adjusted EBIT as a percentage of
sales |
|
|
|
|
|
2023 |
|
2022 |
|
Change |
|
Body Exteriors & Structures |
|
|
|
|
7.4 |
% |
5.2 |
% |
+ 2.2 |
% |
Power & Vision |
|
|
|
|
2.9 |
% |
4.1 |
% |
- 1.2 |
% |
Seating Systems |
|
|
|
|
3.3 |
% |
1.9 |
% |
+ 1.4 |
% |
Complete Vehicles |
|
|
|
|
2.7 |
% |
4.2 |
% |
- 1.5 |
% |
Consolidated Average |
|
|
|
|
4.8 |
% |
4.6 |
% |
+ 0.2 |
% |
|
For further details on our segment results,
please see our Management’s Discussion and Analysis of Results of
Operations and Financial Position and our Interim Financial
Statements.
2023 OUTLOOK
We first disclose a full-year Outlook annually
in February, with quarterly updates. The following Outlook is an
update to our previous Outlook in May 2023.
Updated 2023 Outlook
Assumptions
|
|
|
Current |
|
Previous |
Light Vehicle
Production (millions of
units) North
America Europe China |
15.217.026.2 |
|
15.016.326.2 |
|
|
|
|
|
|
Average Foreign exchange
rates:1 Canadian dollar equals1 euro equals |
|
|
U.S. $0.746U.S. $1.096 |
|
U.S. $0.748U.S. $1.086 |
|
|
|
|
|
|
Updated 2023 Outlook
|
|
|
Current |
|
Previous |
Segment
Sales Body Exteriors
& Structures
Power &
Vision Seating Systems
Complete
Vehicles |
|
|
$17.3 - $17.9 billion$14.0 - $14.4 billion$5.8 - $6.1 billion$5.4 -
$5.7 billion |
|
$16.8 - $17.4 billion$13.0 - $13.4 billion$5.6 - $5.9 billion$5.3 -
$5.6 billion |
Total Sales |
|
|
$41.9 - $43.5 billion |
|
$40.2 - $41.8 billion |
|
|
|
|
|
|
Adjusted EBIT Margin(3) |
|
|
4.8% - 5.2% |
|
4.7% - 5.1% |
|
|
|
|
|
|
Equity Income (included in
EBIT) |
|
|
$110 - $140 million |
|
$95 - $125 million |
|
|
|
|
|
|
Interest Expense, net |
|
|
Approximately $150 million |
|
Approximately $150 million |
|
|
|
|
|
|
Income Tax Rate(4) |
|
|
Approximately 21% |
|
Approximately 21% |
|
|
|
|
|
|
Adjusted Net Income
attributable to Magna(5) |
|
|
$1.4 - $1.6 billion |
|
$1.3 - $1.5 billion |
|
|
|
|
|
|
Capital Spending |
|
|
Approximately $2.5 billion |
|
Approximately $2.4 billion |
|
|
|
|
|
|
Notes:(3) Adjusted EBIT Margin is the ratio of Adjusted EBIT to
Total Sales. Adjusted EBIT used in the Current Outlook above
excludes the amortization of acquired intangible assets. Refer to
the reconciliation of Non-GAAP financial measures in the back of
this press release for further information(4) The Income Tax Rate
has been calculated using Adjusted EBIT and is based on current tax
legislation(5) Adjusted Net Income attributable to Magna
represents Net Income excluding Other expense, net and amortization
of acquired intangible assets |
|
Our 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 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 Business
Our 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.
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,
as well as through a deterioration in consumer confidence.
NON-GAAP FINANCIAL MEASURES
RECONCILIATION
The
reconciliation of Non-GAAP financial measures is as follows: |
|
THREE MONTHS ENDEDJUNE 30, |
|
SIX MONTHS ENDEDJUNE 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Adjusted EBIT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
$ |
354 |
|
|
$ |
(145 |
) |
|
$ |
571 |
|
|
$ |
234 |
|
Add: |
|
|
|
|
|
|
|
Interest expense, net |
|
34 |
|
|
|
20 |
|
|
|
54 |
|
|
|
46 |
|
Other expense, net |
|
86 |
|
|
|
426 |
|
|
|
228 |
|
|
|
487 |
|
Income taxes |
|
129 |
|
|
|
57 |
|
|
|
187 |
|
|
|
98 |
|
Adjusted EBIT |
$ |
603 |
|
|
$ |
358 |
|
|
$ |
1,040 |
|
|
$ |
865 |
|
During the third quarter of 2023, we will revise our calculation of
Adjusted EBIT to exclude the amortization of acquired intangible
assets (primarily customer relationships and technology). We
believe that excluding the amortization of acquired intangible
assets from Adjusted EBIT will help management and investors in
understanding our underlying performance and will improve
comparability between our segmented results of operations and our
peers. |
|
Adjusted EBIT as a percentage of sales (“Adjusted EBIT
margin”) |
|
|
|
|
|
|
|
|
Sales |
$ |
10,982 |
|
|
$ |
9,362 |
|
|
$ |
21,655 |
|
|
$ |
19,004 |
|
Adjusted EBIT |
$ |
603 |
|
|
$ |
358 |
|
|
$ |
1,040 |
|
|
$ |
865 |
|
Adjusted EBIT as a percentage of sales |
|
5.5 |
% |
|
|
3.8 |
% |
|
|
4.8 |
% |
|
|
4.6 |
% |
|
|
|
|
|
|
|
|
|
Adjusted diluted earnings per share |
|
|
|
|
|
|
|
|
Net income (loss) attributable to Magna International Inc. |
$ |
339 |
|
|
$ |
(156 |
) |
|
$ |
548 |
|
|
$ |
208 |
|
Add (deduct): |
|
|
|
|
|
|
|
Other expense, net |
|
86 |
|
|
|
426 |
|
|
|
228 |
|
|
|
487 |
|
Tax effect on Other expense, net |
|
5 |
|
|
|
(27 |
) |
|
|
(27 |
) |
|
|
(40 |
) |
Adjustments to Deferred Tax Valuation Allowances |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(29 |
) |
Adjusted net income attributable to Magna International Inc. |
$ |
430 |
|
|
$ |
243 |
|
|
$ |
749 |
|
|
$ |
626 |
|
Diluted weighted average number of Common Shares outstanding during
the period (millions): |
|
286.3 |
|
|
|
291.1 |
|
|
|
286.4 |
|
|
|
295.0 |
|
Adjusted diluted earnings per shares |
$ |
1.50 |
|
|
$ |
0.83 |
|
|
$ |
2.61 |
|
|
$ |
2.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain of the forward-looking financial
measures above are provided on a Non-GAAP basis. We do not provide
a reconciliation of such forward-looking measures to the most
directly comparable financial measures calculated and presented in
accordance with U.S. GAAP. To do so would be potentially misleading
and not practical given the difficulty of projecting items that are
not reflective of on-going operations in any future period. The
magnitude of these items, however, may be significant.
This press release together with our
Management’s Discussion and Analysis of Results of Operations and
Financial Position and our Interim Financial Statements are
available in the Investor Relations section of our website at
www.magna.com/company/investors and filed electronically through
the System for Electronic Document Analysis and Retrieval (SEDAR)
which can be accessed at www.sedar.com as well as on the United
States Securities and Exchange Commission’s Electronic Data
Gathering, Analysis and Retrieval System (EDGAR), which can be
accessed at www.sec.gov.
We will hold a conference call for interested
analysts and shareholders to discuss our second quarter ended June
30, 2023 results on Friday, August 4, 2023 at 8:00 a.m. ET. The
conference call will be chaired by Swamy Kotagiri, Chief Executive
Officer. The number to use for this call from North America is
1-800-899-2086. International callers should use 1-416-641-6701.
Please call in at least 10 minutes prior to the call start time. We
will also webcast the conference call at www.magna.com. The slide
presentation accompanying the conference call as well as our
financial review summary will be available on our website Friday
prior to the call.
TAGSQuarterly earnings,
financial results, vehicle production
INVESTOR CONTACTLouis Tonelli,
Vice-President, Investor Relations louis.tonelli@magna.com │
905.726.7035
MEDIA CONTACT Tracy Fuerst,
Vice-President, Corporate Communications & PR
tracy.fuerst@magna.com │ 248.761.7004
TELECONFERENCE CONTACTNancy Hansford, Executive
Assistant, Investor Relations nancy.hansford@magna.com │
905.726.7108
OUR BUSINESS (6)Magna is more
than one of the world’s largest suppliers in the automotive space.
We are a mobility technology company with a global,
entrepreneurial-minded team of 174,000(7) employees and an
organizational structure designed to innovate like a startup. With
65+ years of expertise, and a systems approach to design,
engineering and manufacturing that touches nearly every aspect of
the vehicle, we are positioned to support advancing mobility in a
transforming industry. Our global network includes 351
manufacturing operations and 103 product development, engineering
and sales centres spanning 30 countries.
For further information about Magna (NYSE:MGA; TSX:MG), please
visit www.magna.com or follow us on Twitter
@MagnaInt.
(6) Manufacturing operations,
product development, engineering and sales centres include certain
operations accounted for under the equity method.(7)
Number of employees includes over 162,000 employees at our wholly
owned or controlled entities and over 12,000 employees at certain
operations accounted for under the equity method.
FORWARD-LOOKING
STATEMENTSCertain statements in this press release
constitute "forward-looking information" or "forward-looking
statements" (collectively, "forward-looking statements"). Any such
forward-looking statements are intended to provide information
about management's current expectations and plans and may not be
appropriate for other purposes. Forward-looking statements may
include financial and other projections, as well as statements
regarding our future plans, strategic 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",
"aim", "forecast", "outlook", "project", "estimate", "target" and
similar expressions suggesting future outcomes or events to
identify forward-looking statements. The following table identifies
the material forward-looking statements contained in this document,
together with the material potential risks that we currently
believe could cause actual results to differ materially from such
forward-looking statements. Readers should also consider all of the
risk factors which follow below the table:
Material Forward-Looking Statement |
Material Potential Risks Related to Applicable
Forward-Looking Statement |
Light Vehicle Production |
- Light vehicle sales levels
- Production disruptions, including
as a result of labour disruptions
- Supply disruptions
- Production allocation decisions by
OEMs
|
Total SalesSegment Sales |
- Same risks as for Light Vehicle
Production above
- The impact of elevated interest
rates and availability of credit on consumer confidence and in turn
vehicle sales and production
- Potential supply disruptions
- The impact of the Russian invasion
of Ukraine on global economic growth and industry production
volumes
- The impact of rising interest rates
and availability of credit on consumer confidence and, in turn,
vehicle sales and production
- The impact of deteriorating vehicle
affordability on consumer demand, and in turn vehicle sales and
production
- Concentration of sales with six
customers
- Shifts in market shares among
vehicles or vehicle segments
- Shifts in consumer “take rates” for
products we sell
|
Adjusted EBIT MarginNet Income Attributable to Magna |
- Same risks as for Total Sales and
Segment Sales above
- Successful execution of critical
program launches, including complete vehicle manufacturing of the
Fisker Ocean SUV
- Operational underperformance
- Production inefficiencies in our
operations due to volatile vehicle production allocation decisions
by OEMs
- Higher costs incurred to mitigate
the risk of supply disruptions
- Inflationary pressures
- Our ability to secure cost
recoveries from customers and/or otherwise offset higher input
costs
- Price concessions
- Commodity cost volatility
- Scrap steel price volatility
- Higher labour costs
- Tax risks
|
Equity Income |
- Same risks as Adjusted EBIT Margin
and Net Income Attributable to Magna
- Risks related to conducting
business through joint ventures
|
Veoneer Active Safety Acquisition Benefits |
- Same risks as for Total
Sales/Segment Sales above
- Consumer adoption of ADAS
features
- Our ability to grow sales with new
OEM entrants
- Our ability to consistently develop
and commercialize innovative products or processes
- Intellectual property risks
- Risks related to alignment of our
product mix with the “Car of the Future”
- Acquisition integration risk
|
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. While we believe we have a
reasonable basis for making any such forward-looking statements,
they are not a guarantee of future performance or outcomes. In
addition to the factors in the table above, whether actual results
and developments conform to 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:
Macroeconomic, Geopolitical and Other Risks
- impact of the Russian invasion of Ukraine;
- inflationary pressures;
- interest rate levels;
- risks related to COVID-19;
Risks Related to the Automotive Industry
- economic cyclicality;
- regional production volume declines;
- deteriorating vehicle affordability;
- potential consumer hesitancy with respect to Electric Vehicles
(“EVs”);
- intense competition;
Strategic Risks
- alignment of our product mix with the “Car of the Future”;
- our ability to consistently develop and commercialize
innovative products or processes;
- our investments in mobility and technology companies;
- our changing business risk profile as a result of increased
investment in electrification and autonomous/assisted driving,
including: higher R&D and engineering costs, and challenges in
quoting for profitable returns on products for which we may not
have significant quoting experience;
Customer- Related Risks
- concentration of sales with six customers;
- inability to significantly grow our business with Asian
customers;
- emergence of potentially disruptive EV OEMs, including risks
related to limited revenues/operating history of new OEM
entrants;
- Evolving counterparty risk profile;
- dependence on outsourcing;
- OEM consolidation and cooperation;
- shifts in market shares among vehicles or vehicle
segments;
- shifts in consumer "take rates" for products we sell;
- quarterly sales fluctuations;
- potential loss of any material purchase orders;
- potential OEM production-related disruptions;
Supply Chain Risks
- semiconductor chip supply disruptions and price increases, and
the impact on customer production volumes and on the efficiency of
our operations;
- supply disruptions and applicable costs related to supply
disruption mitigation initiatives;
- regional energy shortages/disruptions and pricing;
- a deterioration of the financial condition of our supply
base;
Manufacturing/Operational Risks
- product and new facility launch risks;
- operational underperformance;
- restructuring costs;
- impairment charges;
- labour disruptions;
- skilled labour attraction/retention;
- leadership expertise and succession;
|
|
IT Security/Cybersecurity Risk
- IT/Cybersecurity breach;
- product Cybersecurity breach;
Pricing Risks
- pricing risks between time of quote and start of
production;
- price concessions;
- commodity price volatility;
- declines in scrap steel/aluminum prices;
Warranty / Recall Risks
- costs related to repair or replacement of defective products,
including due to a recall;
- warranty or recall costs that exceed warranty provision or
insurance coverage limits;
- product liability claims;
Climate Change Risks
- transition risks and physical risks;
- strategic and other risks related to the transition to
electromobility;
Acquisition Risks
- competition for strategic acquisition targets;
- inherent merger and acquisition risks;
- acquisition integration risk;
Other Business Risks
- risks related to conducting business through joint
ventures;
- intellectual property risks;
- risks of conducting business in foreign markets;
- fluctuations in relative currency values;
- an increase in pension funding obligations;
- tax risks;
- reduced financial flexibility as a result of an economic
shock;
- inability to achieve future investment returns that equal or
exceed past returns;
- changes in credit ratings assigned to us;
- the unpredictability of, and fluctuation in, the trading price
of our Common Shares;
- a reduction of suspension of our dividend;
Legal, Regulatory and Other Risks
- antitrust risk;
- legal claims and/or regulatory actions against us;
- changes in laws and regulations, including those related to
vehicle emissions, taxation, or made as a result of the COVID-19
pandemic.
- potential restrictions on free trade;
- trade disputes/tariffs; and
- environmental compliance costs.
|
In evaluating forward-looking statements or
forward-looking information, we caution readers not to place undue
reliance on any forward-looking statement. Additionally, 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, including the risks,
assumptions and uncertainties above which are:
- discussed under the “Industry
Trends and Risks” heading of our Management’s Discussion and
Analysis; and
- set out in our revised Annual
Information Form filed with securities commissions in Canada, our
annual report on Form 40-F / 40-F/A filed with the United States
Securities and Exchange commission, and subsequent filings.
Readers should also consider discussion of our
risk mitigation activities with respect to certain risk factors,
which can be also found in our Annual Information Form.
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