Magna International overcomes UAW strike impact for 9% sales growth in Q4

Magna International (NYSE:MGA) reported sales rose 9% year-over-year in Q4 to $10.5B. The company’s revenue growth was ahead of the 7% growth for global light vehicle production. In addition to higher global vehicle production, Magna (MGA) said sales benefitted from the launch of new programs and acquisitions net of divestitures, partially offset by the negative impact of lost vehicle production as a result of the United Auto Workers labor strikes at certain customers, which negatively impacted sales by approximately $275M during the quarter. Excluding the impact of foreign currency translation and acquisitions net of divestitures, sales increased 4% in Q4.

Adjusted EBIT increased to $558M during the quarter from a level of $367M a year ago. The auto supplier pointed to its ongoing focus on operational excellence and cost initiatives, which helped drive strong earnings on higher sales. Adjusted EBIT increase was noted to mainly reflect productivity and efficiency improvements, including lower costs at certain previously underperforming facilities, higher tooling contribution, higher customer recoveries net of higher production input costs, lower net warranty costs, and lower provisions against certain accounts receivable and other balances, partially offset by the negative impact of the UAW labor strikes during the fourth quarter of 2023, higher launch, engineering and other costs associated with new assembly business, and higher restructuring costs.

EPS came in at $1.33 vs. $1.46 consensus and $0.94 a year ago.

During Q4, Magna International (MGA) generated cash from operations before changes in operating assets and liabilities of $660M and used $918M in operating assets and liabilities. Investment activities for the quarter included $944M in fixed asset additions, $189M in investments, other assets and intangible assets and $1M in private equity investments.

Looking ahead, the company sees 2024 sales of $43.8B to $45.4B vs. $44.9B consensus and adjusted net income of $1.6B to $1.8B.

Shares of Magna International (MGA) were down 1.16% in premarket trading to $58.00.