Magna International Inc. (MGA) suffered through one of the
toughest periods in its history in the first quarter of 2009,
posting losses on a GAAP and operating basis as its major customers
struggled to restructure and vehicle production plummeted.
The auto-parts giant suspended its quarterly dividend Wednesday
in a bid to conserve cash, and warned that its results will be hurt
in the short term by planned shutdowns at its major customers.
Magna swung to a loss of $200 million or $1.79 a share in the
first quarter from earnings of $207 million or $1.78 a year
earlier.
Its operating loss was $230 million, compared with operating
earnings of $286 million a year earlier.
The Thomson Reuters mean estimate had called for a loss of $1.61
a share in the latest quarter.
Sales tumbled 46% to $3.6 billion.
Auto-parts suppliers are reeling from the unprecedented downturn
in the U.S. auto industry, which has sent some auto-makers
scrambling for government aid and which led Chrysler LLC to seek
bankruptcy protection last week. Both Chrysler and General Motors
Corp. (GM) also plan lengthy temporary shutdowns this year, which
will further reduce demand.
Magna said GM is its largest customer and Chrysler its fourth
largest.
In the first quarter, Magna's North American and European
average dollar content per vehicle rose 4% and fell 4%,
respectively, from a year earlier. North American vehicle
production was sharply lower, down 50%, while European vehicle
production fell a steep 40%.
Tne company said its complete vehicle assembly sales fell 63% in
the quarter. Complete vehicle assembly volumes fell 72%.
In a recent report GMP Securities said the difficult environment
also presents some oppportunities for suppliers such as Magna with
strong balance sheets with flexible, low-cost operations. Those
companies may be able to diversify, win business from struggling
suppliers, and acquire assets at low prices, it said.
Magna said it's taken steps to cut costs. It added that, while
the auto crisis will reduce its cash resources, it will likely have
a more severe impact on other auto suppliers. "This should provide
us with further opportunities to gain additional business, either
through acquisitions or takeover business, and position us for
recovery when North American auto production returns to more
sustainable levels," it said.
Wednesday in New York, Magna is halted at $36.91.
-Carolyn King; 416-306-2100; AskNewswires@dowjones.com