Magna International Inc. MGA reported adjusted earnings per share of $1.13 for the third quarter of 2015 that surpassed the Zacks Consensus Estimate of $1.09. Earnings per share dropped 1% from $1.14 recorded in the third quarter of 2014.
Revenues went down 7.1% year over year to $7.66 billion in the reported quarter and missed the Zacks Consensus Estimate of $7.73 billion. The year-over-year decline in the top line was due to the weakening of the Euro and Canadian dollar against the U.S. dollar. Excluding the impact of foreign currency translation, sales improved 3% in the quarter.
Vehicle production increased 4% to 4.26 million units in North America and 4% to 4.68 million units in Europe. Operating income grew 11.3% to $680 million in the reported quarter from $611 million a year ago.
Segment Details
Revenues from the External Production segment (comprising North America, Europe, Asia, and ROW units) declined 5.8% year over year to $6.43 billion in the reported quarter.
Sales in North America climbed 2% to $4.3 billion, driven by product launches. Revenues from Europe fell 18% year over year to $1.7 billion in the third quarter owing to lower production volumes, net customer price concessions and a drop in U.S. dollar sales.
Revenues from Asia decreased 12% to $346 million in the quarter. The decline was due to lower production volumes and a drop in U.S. dollar sales. Revenues from ROW plunged 38% to $111 million due to lower U.S. dollar sales and production volumes.
Revenues at the Complete Vehicle Assembly segment totaled $522 million, down 32% from $763 million a year ago. Also, Assembly volumes declined 28% to 23,176 units.
Revenues from the Tooling, Engineering & Other segment increased 8% to $705 million in the quarter under review.
Financials
Magna International had $2.02 billion of cash and cash equivalents as of Sep 30, 2015, compared with $1.25 billion as of Dec 31, 2014. The company had long-term debt of $1.6 billion as of Sep 30, 2015, compared with $995 million as of Dec 31, 2014.
In the first nine months of 2015, Magna International’s cash flow from operations decreased to $1.3 billion from $1.8 billion a year ago. On the other hand, capital expenditures rose to $987 million in the first nine months of 2015 from $863 million in the first nine months of 2014.
Dividend
The company’s board of directors declared a quarterly dividend of 22 cents per share. This dividend is payable on Dec 11, to shareholders on record as of Nov 27, 2015.
Outlook
For full-year 2015, Magna International projects revenues for the External Production segment in the band of $26.3–$27.2 billion. Meanwhile, Complete Vehicle Assembly sales are projected in the range of $2.3–$2.5 billion.
For 2015, the company expects total revenue between $31.3 billion and $32.6 billion. Operating margin is projected at around 7.7%, with a tax rate of 26%, while capital expenditures are anticipated to be $1.5 billion.
Magna International, based in Aurora, Ontario, 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 of cars and light trucks.
The company currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked automobile stocks include General Motors Company GM, American Axle & Manufacturing Holdings Inc. AXL and Lithia Motors Inc. LAD. All these stocks carry a Zacks Rank #2 (Buy).
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