Magna International Inc. (MGA) reported earnings per share of $1.78 in the second quarter of 2013, up 20.3% from $1.48 in the year-ago quarter. It outpaced the Zacks Consensus Estimate of $1.60. Net income increased 18.9% to $415 million from $349 million in the year-ago quarter.
Revenues went up 16% to $9 billion in the reported quarter, beating the Zacks Consensus Estimate of $8.4 billion. The increase was driven by improvement in North American, European and Rest of World (ROW) production sales and higher tooling, engineering and Complete Vehicle Assembly sales.
Vehicle production rose 7% to 4.3 million units in North America. However, production declined 1% to 5 million units in Europe. Operating income increased 15.5% to $543 million in the quarter from $470 million in the year-ago quarter.
Segment Details
Revenues from External Production Sales (comprising North America, Europe and ROW units) went up 13.1% to $7.4 billion in the reported quarter. Revenues from North America increased 10% to $4.3 billion, driven by the launch of new programs and completion of acquisitions.
Revenues from Europe went up 14% to $2.6 billion in the period. The year-over-year improvement was attributable to the launch of new programs and completion of acquisitions, partially offset by a decrease in production volume in certain existing programs. Revenues from ROW augmented 38% to $572 million driven by the launch of new programs and higher production volumes of certain existing programs.
Revenues from the Complete Vehicle Assembly segment went up 23% to $796 million in the quarter, with a 17% rise in assembly volumes to 38,605 units. Revenues from Tooling, Engineering & Other expanded 43% to $733 million in the quarter.
Financial
Magna International had $1.3 billion in cash and cash equivalents as of Jun 30, 2013, compared with $1.5 billion as of Dec 31, 2012. The company had long-term debt of $310 million as of Jun 30, 2013, compared with $361 million as of Dec 31, 2012. Long-term debt to capitalization ratio was 3.2% as of Jun 30, 2013, versus 3.7% as of Dec 31, 2012.
In the first half of 2013, the company’s cash flow from operations increased to $853 million compared with $693 million a year ago. Capital expenditures declined 17.6% to $426 million in the period compared with $517 million in the first half of 2012.
Outlook
For full-year 2013, Magna expects revenues between $27.7 billion and $28.7 billion in the External Production segment. Complete Vehicle Assembly sales are projected in the range of $2.8 billion to $3.1 billion.
Total revenue of the company is expected between $33.3 billion and $34.7 billion for the year. Operating margin is expected to be 5.8% with a tax rate of 23.5% for the year. Capital expenditures for the year are expected to be $1.4 billion.
Magna International, based in Aurora, Canada, is a leading manufacturer and supplier of automotive components. The company designs, develops and manufactures automotive systems, assemblies, modules and components, apart from engineering and assembling complete vehicles, primarily for sale to original equipment manufacturers (OEMs) of cars and light trucks. The company currently carries a Zacks Rank #2 (Buy).
Some stocks that are performing well in the industry where Magna operates include American Axle and Manufacturing Inc. (AXL), Gentex Corp. (GNTX) and Denso Corp. (DNZOY). All of them carry a Zacks Rank #1 (Strong Buy).
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