Magna recorded a loss in the second quarter due to China’s shutdown, the supply chain was hit hard
Magna International Inc. said on friday that COVID-19 China’s lockdown and a stronger US dollar against other currencies, especially the euro, negatively impacted the company’s second-quarter results.
“China’s COVID lockdown during the quarter created further supply chain bottlenecks that are still being felt in the industry,” CEO Seetarama Kotagiri said in a conference call with analysts.
He expects the restrictions to continue through 2022, but the company raised its full-year sales forecast as it predicted an improvement leading to higher production levels in the second half of the year.
There are also some future risks that high inflation and rising interest rates will hit auto consumers, he noted.
Aurora, Ont. The auto parts maker posted a loss in its most recent quarter when it recognized a non-cash loss charge related to its investment in Russia.
The Ontario-based auto parts maker, which keeps its books in US dollars, said it lost $156 million or 54 cents per diluted share in the second quarter, including 1.24 dollars of non-cash losses related to the company’s investment in Russia.
The results compare with earnings of $424 million, or $1.40 per diluted share, for the same quarter of 2021.
Adjusted net income fell to $243 million, or 83 cents per share, from $426 million or $1.40 per share a year earlier.
However, sales were up year-on-year in 2021.
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Magna said sales for the three months ended June 30 were $9.36 billion, up 3.6% from $9.03 billion last year.
The company said higher sales were mainly due to a 2% increase in global light vehicle production, largely due to a 14% increase in North America.
“Our second-quarter results were largely in line with our expectations, with the exception of a decline in our investment in Russia,” Kotagiri said in a statement as part of today’s earnings release. Friday.
During the call, Magna’s CEO also addressed the energy crisis in Europe. Earlier this week, the European Union’s energy ministers agreed to a plan to split gas output from August to March 2023 to avoid the potential effects of Russia’s supply cuts amid the global crisis. The war in Ukraine is going on.
“I wish we could have a say in the implementation of policy on energy allocation,” said Kotagiri.
“We are all looking to see how we can be resilient and work through all of that. It’s just not a corporate solution. I think it should be an industry-wide solution to this problem. “
He added that the company is looking to protect production.
Shares of Magna fell 87 cents, or 1.06%, to $80.86 in late morning trading.
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