Magna International Inc. (TSX: MG; NYSE: MGA) today reported
financial results for the second quarter ended June 30, 2021.
Please click HERE for full second quarter
Financial Statements and MD&A.
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THREE MONTHS ENDED JUNE 30, |
|
SIX MONTHS ENDED JUNE 30, |
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2021 |
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|
2020 |
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|
2021 |
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|
2020 |
|
Reported |
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|
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|
|
|
|
|
|
|
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Sales |
|
$ |
9,034 |
|
$ |
4,293 |
|
|
$ |
19,213 |
|
$ |
12,950 |
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations before income taxes |
|
$ |
540 |
|
$ |
(789 |
) |
|
$ |
1,345 |
|
$ |
(403 |
) |
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Magna International
Inc. |
|
$ |
424 |
|
$ |
(647 |
) |
|
$ |
1,039 |
|
$ |
(386 |
) |
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share |
|
$ |
1.40 |
|
$ |
(2.17 |
) |
|
$ |
3.42 |
|
$ |
(1.29 |
) |
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Non-GAAP Financial
Measures(1) |
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Adjusted EBIT |
|
$ |
557 |
|
$ |
(600 |
) |
|
$ |
1,327 |
|
$ |
(197 |
) |
|
|
|
|
|
|
|
|
|
Adjusted diluted earnings (loss) per share |
|
$ |
1.40 |
|
$ |
(1.71 |
) |
|
$ |
3.27 |
|
$ |
(0.83 |
) |
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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 accompanying this announcement is available
athttps://www.globenewswire.com/NewsRoom/AttachmentNg/660b8ef4-e148-4095-b0ae-0bbebfbf366b
THREE MONTHS ENDED JUNE 30, 2021
As a result of significant production
disruptions due to the global semiconductor chip shortage that
continues to negatively impact global light vehicle production, our
sales, Adjusted EBIT and diluted earnings per share came in well
below our expectations for the second quarter of
2021.
The second quarter of 2020 included
unprecedented, industry-wide production suspensions due to the
COVID-19 pandemic, while the second quarter of 2021 included the
production disruptions due to the ongoing global semiconductor chip
shortage, making the quarters difficult to compare.
We posted sales of $9.0 billion for the second
quarter of 2021, an increase of 110% over the second quarter of
2020, as global light vehicle production increased 58%, largely
driven by increases in North America and Europe.
Adjusted EBIT of $557 million in the second
quarter of 2021 increased $1.2 billion over the second quarter of
2020, largely driven by higher sales.
Income (loss) from operations before income
taxes was $540 million for the second quarter of 2021 compared to
$(789) million in the second quarter of 2020. Included in
income from operations before income taxes in the second quarter of
2021 were Other expense, net items totaling $6 million, comprised
of net restructuring costs, partially offset by unrealized gains
related to the revaluation of public company warrants and certain
public and private equity investments. Included in loss from
operations before income taxes in the second quarter of 2020 were
Other expense, net items totaling $168 million comprised of
restructuring and impairment charges. Excluding Other expense, net
from both periods, income from operations before income taxes
increased $1.2 billion in the second quarter of 2021 compared to
the second quarter of 2020.
Net income (loss) attributable to Magna
International Inc. was $424 million for the second quarter of 2021
compared to $(647) million for the second quarter of 2020.
Included in net income attributable to Magna International Inc. in
the second quarters of 2021 and 2020 were Other expense, net items
totaling $2 million and $136 million after tax, respectively.
Excluding Other income, net from both periods, net income
attributable to Magna International Inc. increased $937 million in
the second quarter of 2021 compared to the second quarter of
2020.
Diluted earnings (loss) per share increased to
$1.40 in the second quarter of 2021, compared to $(2.17) in the
comparable period and adjusted diluted earnings (loss) per share
increased 182% to $1.40 compared to $(1.71).
In the second quarter of 2021, we generated cash
from operations before changes in operating assets and liabilities
of $777 million and used $249 million in operating assets and
liabilities. Investment activities for the second quarter of 2021
included $277 million in fixed asset additions, a $93 million
increase in investments, other assets and intangible assets, $21
million in acquisitions, and $17 million in public and private
equity investments.
SIX MONTHS ENDED JUNE 30, 2021
We posted sales of $19.2 billion for the six
months ended June 30, 2021, an increase of 48% from the six months
ended June 30, 2020, as global light vehicle production increased
36%, largely driven by a 41% increase in North America and a 37%
increase in Europe.
Adjusted EBIT was $1.3 billion for the six
months ended June 30, 2021 compared to an Adjusted EBIT loss of
$197 million for the six months ended June 30, 2020, largely driven
by higher sales.
During the six months ended June 30, 2021,
income from operations before income taxes was $1.3 billion, net
income attributable to Magna International Inc. was $1.0 billion
and diluted earnings per share was $3.42, increases of $1.7
billion, $1.4 billion and $4.71, respectively, each compared to the
first six months of 2020.
During the first six months ended June 30, 2021,
Adjusted EBIT increased to $1.3 billion and Adjusted diluted
earnings per share increased to $3.27, each compared to the first
six months of 2020.
For the six months ended June 30, 2021, we
generated cash from operations before changes in operating assets
and liabilities of $1.7 billion and used $559 million in operating
assets and liabilities. Investment activities for the six months
ended June 30, 2021 included $489 million in fixed asset additions,
a $197 million increase in investments, other assets and intangible
assets, and $20 million in public and private equity investments.
We also assumed net cash of $18 million related to business
combinations.
RETURN OF CAPITAL TO SHAREHOLDERS
During the three months ended June 30, 2021, we
paid dividends of $127 million and repurchased for cancellation 1.0
million shares for $99 million.
Our Board of Directors declared a second quarter
dividend of $0.43 per Common Share, payable on September 3, 2021 to
shareholders of record as of the close of business on August 20,
2021.
A photo accompanying this announcement is available
athttps://www.globenewswire.com/NewsRoom/AttachmentNg/c8432bcf-76e9-4e0f-8128-d76c7422fd11
SEGMENT SUMMARY
($Millions unless
otherwise noted) |
For the three months ended June 30, |
Sales |
|
Adjusted EBIT |
|
|
2021 |
|
|
2020 |
|
|
Change |
|
|
|
2021 |
|
2020 |
|
|
Change |
Body Exteriors & Structures |
$ |
3,647 |
|
$ |
1,623 |
|
$ |
2,024 |
|
|
$ |
227 |
$ |
(315 |
) |
$ |
542 |
Power & Vision |
|
2,881 |
|
|
1,298 |
|
|
1,583 |
|
|
|
203 |
|
(226 |
) |
|
429 |
Seating Systems |
|
1,166 |
|
|
524 |
|
|
642 |
|
|
|
26 |
|
(84 |
) |
|
110 |
Complete Vehicles |
|
1,490 |
|
|
933 |
|
|
557 |
|
|
|
79 |
|
44 |
|
|
35 |
Corporate and Other |
|
(150 |
) |
|
(85 |
) |
|
(65 |
) |
|
|
22 |
|
(19 |
) |
|
41 |
Total Reportable Segments |
$ |
9,034 |
|
$ |
4,293 |
|
$ |
4,741 |
|
|
$ |
557 |
$ |
(600 |
) |
$ |
1,157 |
|
For the three months ended June 30, |
|
|
Adjusted EBIT as a percentage of
sales |
|
|
|
|
|
|
2021 |
|
|
2020 |
|
|
Change |
|
Body Exteriors & Structures |
|
|
|
|
|
6.2 |
% |
|
(19.4 |
)% |
|
25.6 |
% |
Power & Vision |
|
|
|
|
|
7.0 |
% |
|
(17.4 |
)% |
|
24.4 |
% |
Seating Systems |
|
|
|
|
|
2.2 |
% |
|
(16.0 |
)% |
|
18.2 |
% |
Complete Vehicles |
|
|
|
|
|
5.3 |
% |
|
4.7 |
% |
|
0.6 |
% |
Consolidated Average |
|
|
|
|
|
6.2 |
% |
|
(14.0 |
)% |
|
20.2 |
% |
|
|
($Millions unless
otherwise noted) |
For the six months ended June 30, |
Sales |
|
Adjusted EBIT |
|
|
2021 |
|
|
2020 |
|
|
Change |
|
|
|
2021 |
|
|
2020 |
|
|
Change |
|
Body Exteriors & Structures |
$ |
7,672 |
|
$ |
5,299 |
|
$ |
2,373 |
|
|
$ |
554 |
|
$ |
(116 |
) |
$ |
670 |
|
Power & Vision |
|
6,037 |
|
|
3,821 |
|
|
2,216 |
|
|
|
500 |
|
|
(91 |
) |
|
591 |
|
Seating Systems |
|
2,469 |
|
|
1,785 |
|
|
684 |
|
|
|
81 |
|
|
(44 |
) |
|
125 |
|
Complete Vehicles |
|
3,340 |
|
|
2,254 |
|
|
1,086 |
|
|
|
159 |
|
|
94 |
|
|
65 |
|
Corporate and Other |
|
(305 |
) |
|
(209 |
) |
|
(96 |
) |
|
|
33 |
|
|
(40 |
) |
|
73 |
|
Total Reportable Segments |
$ |
19,213 |
|
$ |
12,950 |
|
$ |
6,263 |
|
|
$ |
1,327 |
|
$ |
(197 |
) |
$ |
1,524 |
|
|
For the six months ended June 30, |
|
|
Adjusted EBIT as a percentage of
sales |
|
|
|
|
|
2021 |
|
2020 |
|
Change |
|
Body Exteriors & Structures |
|
|
|
|
7.2 |
% |
(2.2 |
)% |
9.4 |
% |
Power & Vision |
|
|
|
|
8.3 |
% |
(2.4 |
)% |
10.7 |
% |
Seating Systems |
|
|
|
|
3.3 |
% |
(2.5 |
)% |
5.8 |
% |
Complete Vehicles |
|
|
|
|
4.8 |
% |
4.2 |
% |
0.6 |
% |
Consolidated Average |
|
|
|
|
6.9 |
% |
(1.5 |
)% |
8.4 |
% |
|
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.
2021 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 2021.
Updated 2021 Outlook
Assumptions
|
|
|
Current |
|
Previous |
Light Vehicle
Production (millions of
units) North
America Europe China |
14.418.124.7 |
|
15.618.524.7 |
|
|
|
|
|
|
Average Foreign exchange rates:1
Canadian dollar equals1 euro equals |
|
|
U.S. $0.801U.S. $1.193 |
|
U.S. $0.797U.S. $1.201 |
Updated 2021 Outlook
|
|
|
Current |
|
Previous |
Segment
Sales Body Exteriors
& Structures
Power &
Vision Seating Systems
Complete
Vehicles |
|
|
$15.3 - $15.9 billion$11.8 - $12.2 billion$5.1 - $5.4 billion$6.3 -
$6.6 billion |
|
$16.5 - $17.1 billion$12.0 - $12.4 billion$5.6 - $5.9 billion$6.7 -
$7.0 billion |
Total Sales |
|
|
$38.0 - $39.5 billion |
|
$40.2 - $41.8 billion |
|
|
|
|
|
|
Adjusted EBIT Margin(3) |
|
|
7.0% - 7.4% |
|
7.2% - 7.6% |
|
|
|
|
|
|
Equity Income (included in
EBIT) |
|
|
$115 - $145 million |
|
$120 - $150 million |
|
|
|
|
|
|
Interest Expense, net |
|
|
Approximately $80 million |
|
Approximately $100 million |
|
|
|
|
|
|
Income Tax Rate(4) |
|
|
Approximately 23% |
|
Approximately 23% |
|
|
|
|
|
|
Net Income attributable to
Magna(5) |
|
|
$2.0 - $2.2 billion |
|
$2.2 - $2.4 billion |
|
|
|
|
|
|
Capital Spending |
|
|
Approximately $1.6 billion |
|
Approximately $1.6 billion |
|
|
|
|
|
|
Notes:(3) Adjusted EBIT Margin is the ratio of Adjusted EBIT to
Total Sales(4) The Income Tax Rate has been calculated using
Adjusted EBIT and is based on current tax legislation(5) Net Income
attributable to Magna represents Net Income excluding Other expense
(income), net |
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 2021 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; 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 deterioration in consumer
confidence.NON-GAAP FINANCIAL MEASURES
RECONCILIATION
Adjusted EBIT |
|
The following table reconciles net income to Adjusted EBIT: |
|
|
|
For the three months ended June 30, |
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
Net income (loss) |
$ |
436 |
|
|
$ |
(652 |
) |
Add (deduct): |
|
|
|
Interest expense, net |
|
11 |
|
|
|
21 |
|
Other expense, net |
|
6 |
|
|
|
168 |
|
Income taxes |
|
104 |
|
|
|
(137 |
) |
Adjusted EBIT |
$ |
557 |
|
|
$ |
(600 |
) |
|
|
|
|
|
|
|
|
Adjusted EBIT as a percentage of sales (“Adjusted EBIT
margin”) |
|
|
|
|
|
|
|
Adjusted EBIT as a percentage of sales is calculated in the table
below: |
|
|
|
For the three months ended June 30, |
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
Sales |
$ |
9,034 |
|
|
$ |
4,293 |
|
Adjusted EBIT |
$ |
557 |
|
|
$ |
(600 |
) |
Adjusted EBIT as a percentage of sales |
|
6.2 |
% |
|
|
(14.0 |
)% |
|
|
|
|
|
|
|
|
Adjusted diluted earnings per share |
|
|
|
|
|
|
|
The following table reconciles net income attributable to Magna
International Inc. to Adjusted diluted earnings per share: |
|
|
|
For the three months ended June 30, |
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
Net income (loss) attributable to Magna International Inc. |
$ |
424 |
|
|
$ |
(647 |
) |
Add (deduct): |
|
|
|
Other expense, net |
|
6 |
|
|
|
168 |
|
Tax effect on Other expense, net |
|
(4 |
) |
|
|
(32 |
) |
Adjusted net income (loss) attributable to Magna International
Inc. |
$ |
426 |
|
|
$ |
(511 |
) |
Diluted weighted average number of Common Shares outstanding during
the period (millions): |
|
303.6 |
|
|
|
298.4 |
|
Adjusted diluted earnings (loss) per share |
$ |
1.40 |
|
|
$ |
(1.71 |
) |
NON-GAAP FINANCIAL MEASURES
RECONCILIATION
Adjusted EBIT |
|
The following table reconciles net income to Adjusted EBIT: |
|
|
|
For the six months ended June 30, |
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
Net income (loss) |
$ |
1,058 |
|
|
$ |
(400 |
) |
Add (deduct): |
|
|
|
Interest expense, net |
|
34 |
|
|
|
38 |
|
Other (income) expense, net |
|
(52 |
) |
|
|
168 |
|
Income taxes |
|
287 |
|
|
|
(3 |
) |
Adjusted EBIT |
$ |
1,327 |
|
|
$ |
(197 |
) |
|
|
|
|
|
|
|
|
Adjusted EBIT as a percentage of sales (“Adjusted EBIT
margin”) |
|
|
|
|
|
|
|
Adjusted EBIT as a percentage of sales is calculated in the table
below: |
|
|
|
For the six months ended June 30, |
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
Sales |
$ |
19,213 |
|
|
$ |
12,950 |
|
Adjusted EBIT |
$ |
1,327 |
|
|
$ |
(197 |
) |
Adjusted EBIT as a percentage of sales |
|
6.9 |
% |
|
|
(1.5 |
)% |
|
|
|
|
|
|
|
|
Adjusted diluted earnings per share |
|
|
|
|
|
|
|
The following table reconciles net income attributable to Magna
International Inc. to Adjusted diluted earnings per share: |
|
|
|
For the six months ended June 30, |
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
Net income (loss) attributable to Magna International Inc. |
$ |
1,039 |
|
|
$ |
(386 |
) |
Add (deduct): |
|
|
|
Other (income) expense, net |
|
(52 |
) |
|
|
168 |
|
Tax effect on Other (income) expense, net |
|
5 |
|
|
|
(32 |
) |
Adjusted net income (loss) attributable to Magna International
Inc. |
$ |
992 |
|
|
$ |
(250 |
) |
Diluted weighted average number of Common Shares outstanding during
the period (millions): |
|
303.6 |
|
|
|
300.3 |
|
Adjusted diluted earnings (loss) per share |
$ |
3.27 |
|
|
$ |
(0.83 |
) |
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, 2021 results on Friday, August 6, 2021 at 7:00 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 1-800-950-7243. International callers should use
1-416-981-9010. 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 │
248.631.5396
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 158,000
employees and an organizational structure designed to innovate like
a startup. With 60+ 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
347 manufacturing operations and 87 product development,
engineering and sales centres spanning 28 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 and employee figures include certain
equity-accounted operations.FORWARD-LOOKING STATEMENTS
Certain 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 |
Total SalesSegment Sales |
- Mandatory stay-at-home orders and
other restrictions to help contain COVID-19 spread could impact
vehicle sales, vehicle production and our own production
- Economic impact of COVID-19 on
consumer confidence
- Supply disruptions, including as a
result of a semiconductor chip shortage currently being experienced
in the industry
- 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
- Operational underperformance
- Higher costs incurred to mitigate
the risk of supply disruptions, including: materials price
increases; higher-priced substitute supplies; premium freight costs
to expedite shipments; production inefficiencies due to production
lines being stopped/restarted unexpectedly based on customers’
production schedules; price increases from sub-suppliers that have
been negatively impacted by production inefficiencies; and
potential claims against us if customer production is
disrupted
- Price concessions
- Commodity cost 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
|
Free Cash Flow |
- Same risks as for Total
Sales/Segment Sales, and Adjusted EBIT Margin and Net Income
Attributable to Magna above
|
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:
Risks Related to the
Automotive Industry
- economic cyclicality;
- regional production volume declines, including as a result of
the COVID-19 pandemic;
- intense competition;
- potential restrictions on free trade;
- trade disputes/tariffs;
Customer and Supplier Related Risks
- concentration of sales with six customers;
- emergence of potentially disruptive Electric Vehicle OEMs;
- 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;
- a deterioration in the financial condition of our supply base,
including as a result of the COVID-19 pandemic;
Manufacturing Operational Risks
- product and new facility launch risks;
- operational underperformance;
- restructuring costs;
- impairment charges;
- labour disruptions;
- COVID-19 shutdowns;
- supply disruptions, including with respect to semiconductor
chips;
- higher costs to mitigate supply disruptions;
- climate change risks;
- attraction/retention of skilled labour and leadership
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 cost 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;
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;
- our ability to consistently develop and commercialize
innovative products or processes;
- our changing business risk profile as a result of increased
investment in electrification and autonomous 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;
- risks of conducting business in foreign markets;
- fluctuations in relative currency values;
- tax risks;
- reduced financial flexibility as a result of an economic
shock;
- changes in credit ratings assigned to us;
Legal, Regulatory and Other Risks
- antitrust risk;
- legal claims and/or regulatory actions against us; and
- changes in laws and regulations, including those related to
vehicle emissions or made as a result of the COVID-19
pandemic.
|
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 Annual Information
Form filed with securities commissions in Canada, our annual report
on Form 40-F 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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