Auto parts maker projects sales to China to double by 2015.
AURORA, Ont. –Magna International Inc. says it is looking outside of its traditional markets of North America and western Europe to grow its business, with an eye to more than double its sales in China by 2015.
“The Chinese market, already the world’s largest, continues to experience massive growth both in percentage and absolute terms,” Magna chief executive Don Walker told an investor conference. “In the past couple of years, we’ve added a number of new manufacturing facilities with at least four more greenfield plants in the next three years.”
But Walker noted Magna is also growing its business in South America, Russia and India – other areas where economic growth is generally expected to be faster than in North America and western Europe.
Walker made the comments after Magna announced it expects its sales to grow to between US$31.3 billion and $32.7 billion this year, with increases across its operations. The outlook for 2013 compared with expectations for sales between $30.3 billion and $31.2 billion for 2012 and would represent an increase of about $1.25 billion or four per cent at the mid-point of each range.
The auto parts maker based its outlook for 2013 on estimates that automotive manufacturers will produce 15.3 million vehicles in North America this year and 12 million in Europe. That compared with an outlook for 2012 of 15.3 million vehicles in North America and 12.6 million in Europe.
In Europe, Walker said the company is working to improve its bottom-line and plans to close or consolidate “a number” of locations. However, he declined to say exactly where and how many workers would be affected.
“Most of this will take place over the next three years,” Walker said. “Part of our restructuring will be a result of exiting certain not strategic businesses as programs come to an end.”
However, Walker said there is opportunity in Europe – a region where government austerity measures have depressed the region’s economy..
“With our balance sheet and capabilities, we believe we’ll have the opportunity to capitalize on the current weak macroeconomic environment in Europe through takeover work and or attractive acquisitions,” Walker said.
Production sales for 2013 in North America are estimated at between $15.3 billion and $15.7 billion, while European sales are forecast between $9 billion and $9.3 billion.
For 2012, Magna estimated that it would tally between $15.1 billion and $15.4 billion for North America and $8.6 billion to $8.8 billion for Europe.
Sales in the rest of the world this year are expected to be between $2.2 billion and $2.5 billion, up from an estimate of $1.8 billion to 1.9 billion for last year.
Complete vehicle assembly sales for 2013 are forecast between $2.5 billion and $2.8 billion, up from its 2012 outlook for $2.4 billion to $2.6 billion.
BMO Capital Markets analyst Peter Sklar said the guidance was slightly ahead of his expectations.
“In addition, Magna provided some high-level revenue guidance for 2014/2015 and expects production sales to grow by $2.2 billion during the two-year period,” Sklar wrote in a note to clients. “The implication is that Magna is anticipating only modest North American content growth through the period.”
Capital spending for the year is expected to total about $1.4 billion, about the same as last year.
Magna has more than 300 factories and 88 product development, engineering and sales centres around the world and more than 100,000 employees.
© 2013 The Canadian Press