Magna Q2 earnings: Canadian provider experiences $156 million Q2 loss on affect of Russia-Ukraine struggle, increased prices

Magna International Inc. reported a $156 million web loss within the second quarter because the diversified Canadian auto provider grappled with increased commodities and power prices and the affect of the Russian invasion of Ukraine.

The net loss compares with second-quarter 2021 earnings of $424 million and comes regardless of a 3.6 % year-over-year achieve in gross sales to $9.36 billion.

The loss for the quarter ended June 30 features a one-time impairment cost of $376 million associated to Magna’s operations in Russia, which stay considerably idled due to the war. Magna operates six plants in the country that make use of 2,500 folks.

Adjusted earnings earlier than curiosity, taxes and different bills got here in at $358 million, Magna mentioned, in contrast with $557 million in adjusted web earnings within the second quarter of 2021.

“Persevering with challenges have impacted our Q2 earnings,” Magna CEO Swamy Kotagiri mentioned in a Friday convention name with analysts. “Nevertheless, outcomes have been consistent with our inner expectations.”

Increased commodities prices and different inflationary components have led to “elevated” enter prices which have dragged down the corporate’s margins. Kotagiri mentioned the corporate is “extremely targeted” on recovering these elevated prices and continues to have discussions with automakers to regulate pricing.

As with a lot of the trade, Magna’s second-quarter outcomes have been additionally hit by the microchip shortage and COVID-19 lockdowns in China, which decreased demand for autos on this planet’s largest auto market.

Kotagiri mentioned he anticipated these constraints to ease within the second half of the 12 months relative to the primary as the worldwide provide of semiconductors improves and because the Chinese language authorities implements financial stimulus.

Gross sales inside Magna’s physique exteriors and buildings unit rose eight % to $3.9 billion partially due to elevated world car manufacturing and the launch of latest applications.

Likewise, seating unit gross sales rose 7 % from a 12 months earlier to $1.Three billion. Income from the ability and imaginative and prescient unit have been flat at $2.9 billion.

Magna’s full car meeting enterprise noticed gross sales income decline 6 % to $1.four billion largely due to the euro weakening towards the greenback. It produced 1,500 extra autos for automakers than it did a 12 months earlier.

Adjusted earnings earlier than curiosity and taxes fell throughout all enterprise items in contrast with the second quarter of 2021.

Outlook, acquisitions

Magna modestly elevated its annual gross sales outlook, anticipating income of $37.6 billion to $39.2 billion for the 12 months, up about $300 million in contrast with its earlier estimate. Its annual web earnings forecast remained unchanged, at $1.Three billion to $1.5 billion.

Kotagiri mentioned low supplier stock ranges and resilient demand for brand spanking new autos ought to assist to maintain the auto market afloat, even because the trade continues to cope with provide chain challenges and rising rates of interest.

As world financial situations evolve, Magna stays open to acquisitions within the second half of the 12 months, Kotagiri mentioned.

“There could be alternatives that come alongside, and we’re very attentive,” he mentioned. “We’ll have our ear to the bottom a bit of bit extra.”

Magna shares fell 1.Three % to $63.01 in morning buying and selling.

Magna ranks No. four on the Automotive News list of the top 100 global suppliers, with worldwide elements gross sales to automakers of $36.2 billion in 2021.

Reuters contributed to this report.