Magna takes big hit in second quarter from COVID-19 auto production shutdowns
Global light vehicle production was down 42%
AURORA, Ont. — Magna International Inc. says COVID-19 shutdowns of automotive production caused a US$1.2 billion drop in its earnings and $5.5 billion hit to sales in the second quarter.
The autoparts maker says the impact was far worse than the quarterly declines during the 2008-2009 financial crisis as it lost US$647 million or $2.17 per diluted share in the second quarter, compared with a profit of US$452 million or $1.42 per share a year earlier.
Reporting in U.S. dollars, its adjusted loss was $1.71 per share, down from a $1.59 per share profit in the prior year.
Revenues for the three months ended June 30 plunged nearly 58% to $4.3 billion, compared with $10.1 billion in the second quarter of 2019.
Magna was expected to report an adjusted loss of $1.57 per share on $4.1 billion of revenues, according to financial markets data firm Refinitiv.
The Ontario-based company says global light vehicle production was down 42% while production in its two largest markets in North American and Europe were down 70 and 59% respectively.
“While our second quarter results were impacted by a precipitous decline in global vehicle production caused by the COVID-19 pandemic, I am pleased we have been able to successfully and safely restart operations at our plants around the world,” said CEO Don Walker.
“Additionally, we have taken several actions across the company to reduce our cost structure to be aligned with our updated expectations for future vehicle production. We expect our second half 2020 results to begin to reflect these actions. I am confident that Magna will emerge from the recent economic upheaval as strong as ever.”