Canadian parts giant Magna International Inc. on Friday said fourth-quarter sales gained 4.6 percent to a record $10.1 billion on the strength of contract car assembly, but pre-tax income fell 21 percent to $607 million as the company continued to ramp up investments in electric and autonomous vehicles.
Magna reports its earnings in U.S. currency.
Magna’s net income for the quarter was $456 million, down 18 per cent over the same quarter last year.
The supplier in the fourth quarter benefited from new launches by automakers Jaguar Land Rover and Daimler AG.
Sales at Magna’s complete-vehicles unit rose 39 per cent to $1.69 billion, with assembly volumes rising 35 per cent in the quarter to 36,600 units.
On Magna’s fourth quarter conference call Friday, CEO Don Walker downplayed previous comments that the company’s contract assembly subsidiary, Magna Steyr, was considering a move into North America, possibly at General Motors Oshawa, Ont. plant, slated for closure at the end of the year.
“There’s been a lot of speculation on that. But there’s no plans to expand at the current time,” he said. “There continue to be articles about us doing things. But we have no plans at this time."
The world’s third-biggest auto supplier by sales is betting on the fast-growing electric and self-driving vehicles market where suppliers plan to spend $300 billion to bring electric cars to the mass market over the next decade.
The company said sales at its power and vision division, which also provides parts, such as cameras, for electric and self-driving vehicles, rose just about one per cent.
In a statement, Magna said lower margins in its power and vision segment were mainly associated with increased spending for electrification and autonomy, higher launch costs, a decline in equity income largely due to lower earnings at Getrag's joint-ventures in China and higher warranty expense.
The company partnered with ride-hailing company Lyft Inc. last March, to co-develop hardware and software for self-driving cars. While its seating systems sales jumped 10 per cent to $1.44 billion in the quarter, sales at its biggest unit that makes vehicles structures fell 3.6 per cent to $4.18 billion in the quarter.
Magna said in a statement the decrease in body and structure sales “was primarily due to lower production volumes on certain existing programs and a $108 million decrease due to the weakening of the Canadian dollar, euro and Russian ruble, each against the U.S. dollar.”
Excluding one-time items, Magna earned $1.63 per share, ahead of consensus analyst expectation of $1.59 per share, according to IBES data from Refinitiv. Magna shares rose 3.7 percent to $54.55 in early trading on Friday. The company also said it bumped up its quarterly dividend 11 percent to 36.5 cents per share.
For all of 2018, Magna said net income improved 4.5 per cent to $2.3 billion while total revenue increased 12 per cent to a record $40.8 billion.
“We posted a number of records in 2018 including sales that surpassed $40 billion, earnings and free cash flow generation," Walker said in a statement. "We also continued to optimize our product portfolio and to enhance value for shareholders with the announced divestiture of our Fluid Pressure and Controls business, as well as investments in smaller technology-oriented businesses."
The company stuck with its current forecast for 2019, assuming North American production of 17 million light vehicles. Magna is projecting annual sales this year between $40.2 billion and $42.4 billion. It expects stable net income ranging from $2.1 billion to $2.3 billion.
Walker added: "Looking forward, we are well-positioned to continue to grow with our traditional customers as well as new entrants to the industry.”
Reuters and Automotive News staff contributed to this report.