Magna projects record year for automotive, boosts 2012 outlook
by Canadian Press
The new guidance range is up from February's sales projection of between $28 billion and $29.5 billion.
Aurora, Ont.—Magna International Inc. is so optimistic about an improving global auto industry that boosted its 2012 outlook to project a record year of sales for its auto parts business.
Canada’s largest auto parts maker, which keeps its books in U.S. dollars, said it now expects to book between US$29 billion and $30.5 billion in sales this year.
Magna, based in Aurora, Ont., also increased its outlook for North American vehicle production after strong growth in car and truck production helped buoy first-quarter sales and profits that soared past analysts’ expectations.
The new guidance range is up from February’s sales projection of between $28 billion and $29.5 billion.
Magna’s new outlook foresees North American vehicle production growing to 14.4 million units from 13.8 million in the February outlook, but it also believes European sales will be lower, around 12.7 million, down from 13 million in its February outlook.
Many automakers have been reporting rising sales of cars and trucks in the opening months of 2012 and it is expected that Detroit’s big three could face a supply deficit as demand returns. The companies closed factories and scaled back production to deal with a global downturn in demand during the financial crisis.
Ford recently added extra weeks of production to keep pace with demand and others could soon follow. That’s good news for auto parts makers like Magna, which provides automakers with everything from engines to upholstery.
Magna’s optimistic guidance was accompanied by the announcement of an ambitious global growth plan that includes building 30 new plants over the next three years in North America, South America, Europe and Asia.
Magna further announced that is has a new deal that will see its Magna Steyr subsidiary assemble a new entry-level Infiniti compact vehicle for Nissan starting in 2014.
Magna posted a first-quarter profit of $343 million, up from $322 million in the first quarter of 2011.
Sales in the quarter totalled US$7.7 billion for the period ended March 31, compared to $7.2 billion in the same period last year. Growth in North American, European, and rest of world production sales were partially offset by decreases in its complete vehicle assembly sales and tooling, engineering and other sales.
Magna is Canada’s largest auto parts manufacturer and one of the largest in the world. It primarily supplies auto makers in North America and Europe.