Bangkok--22 Dec--Jigsaw Communications
Magna International Inc. (TSX: MG.A; NYSE: MGA) today reported financial results for the third quarter and nine months ended September 30, 2008.
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
2008 2007 2008 2007
Sales $ 5,533 $ 6,077 $ 18,868 $ 19,231
Operating (loss) income $ (112) $ 267 $ 493 $ 949
Net (loss) income $ (215) $ 155 $ 219 $ 635
Diluted (loss) earnings per share $ (1.93) $ 1.38 $ 1.92 $ 5.69
All results are reported in millions of U.S. dollars, except per share figures, which are in U.S. dollars.
THREE MONTHS ENDED SEPTEMBER 30, 2008
Magna Inc. posted sales of $5.5 billion for the third quarter ended September 30, 2008, a decrease of 9% over the third quarter of 2007. This lower sales level was a result of decreases in our North American production sales and complete vehicle assembly sales, offset in part by increases in our European and Rest of World production sales and our tooling, engineering and other sales.
During the third quarter of 2008, our North American average dollar content per vehicle remained essentially unchanged while our European average dollar content per vehicle increased by 10%, each compared to the third quarter of 2007. In addition, North American and European vehicle production declined 18% and 8%, respectively, each compared to the third quarter of 2007.
Complete vehicle assembly sales decreased 20% to $687 million for the third quarter of 2008 compared to $859 million for the third quarter of 2007, while complete vehicle assembly volumes declined 40% to 25,231 units compared to the third quarter of 2007.
During the third quarter of 2008, operating loss was $112 million, net loss was $215 million and diluted loss per share was $1.93, decreases of $379 million, $370 million and $3.31, respectively, each compared to the third quarter of 2007.
During the quarter ended September 30, 2008, we recorded a number of unusual items, including impairment charges associated with long-lived assets and future tax assets, restructuring charges, and a foreign currency gain. The aggregate net charge for unusual items totalled $234 million. On a per share basis, the aggregate net charge for unusual items totalled $2.10.
During the third quarter ended September 30, 2008, we generated cash from operations of $285 million before changes in non-cash operating assets and liabilities, and invested $35 million in non-cash operating assets and liabilities. Total investment activities for the third quarter of 2008 were $236 million, including $150 million in fixed asset additions, $4 million in acquisition costs, and $82 million increase in other assets.
NINE MONTHS ENDED SEPTEMBER 30, 2008
We posted sales of $18.9 billion for the nine months ended September 30, 2008, a decrease of 2% over the nine months ended September 30, 2007. This lower sales level was a result of decreases in our North American production sales and complete vehicle assembly sales, offset in part by increases in our European and Rest of World production sales and our tooling, engineering and other sales.
During the nine months ended September 30, 2008, North American and European average dollar content per vehicle increased 2% and 18%, respectively, each over the comparable nine-month period in 2007. During the nine months ended September 30, 2008, North American and European vehicle production declined 14% and 3%, respectively, each over the comparable nine-month period in 2007.
Complete vehicle assembly sales decreased 7% to $2.827 billion for the nine months ended September 30, 2008 compared to $3.027 billion for the nine months ended September 30, 2007, while complete vehicle assembly volumes declined 31% to 108,503 units compared to the first nine months of 2007. During the nine months ended September 30, 2008, operating income was $493 million, net income was $219 million and diluted earnings per share was $1.92, decreases of $456 million, $416 million and $3.77, respectively, each compared to the third quarter of 2007.
During the nine months ended September 30, 2008, we generated cash from operations of $1.21 billion before changes in non-cash operating assets and liabilities, and invested $532 million in non-cash operating assets and liabilities. Total investment activities for the first nine months of 2008 were $770 million, including $465 million in fixed asset additions, $109 million to purchase subsidiaries, and $196 million increase in investments and other assets.
During the nine months ended September 30, 2008, we purchased for cancellation 3.5 million Class A
Subordinate Voting Shares for cash consideration of $245 million, pursuant to terms of our normal course issuer bid program.
Don Walker, Magna's co-CEO commented, "As a result of the extremely challenging conditions of the automotive industry in North America, including weakening automotive sales and vehicle production, it is necessary and prudent that we undertake further restructuring actions. None the less, we continue to invest in new technologies and programs with our customers for Magna's long-term growth and profitability that will benefit our customers, employees and shareholders in the years ahead."
Vincent J. Galifi, our Executive Vice President and Chief Financial Officer said, "During the third quarter, the auto industry downturn worsened in North America and spread to Western Europe. These factors took their toll on our third quarter financial results, and conditions are not expected to improve meaningfully in the short term. Across Magna, we are reviewing all uses of cash with an eye to maintaining our strong financial position in light of the turmoil currently facing many automotive participants. Our Board's decision to adjust our dividend as a result of our reduction in profitability and uncertainty about the timing of an industry recovery in our traditional markets reflects this view."
2008 OUTLOOK
We have significantly reduced our expectations for 2008 light vehicle production volumes in North America. For the full year 2008, we now expect light vehicle production volumes of approximately 12.8 million units in North America and approximately 14.9 million units in Europe. Consequently, we expect consolidated sales to be between $23.2 billion and $24.3 billion for full year 2008. Full year 2008 average dollar content per vehicle is expected to be between $835 and $860 in North America and between $475 and $495 in Europe. We expect full year 2008 complete vehicle assembly sales to be between $3.25 billion and $3.45 billion. In addition, we expect that full year 2008 spending for fixed assets will be in the range of $700 million to $750 million.
We are the most diversified global automotive supplier. We design, develop and manufacture technologically advanced automotive systems, assemblies, modules and components, and engineer and assemble complete vehicles, primarily for sale to original equipment manufacturers ("OEMs") of cars and light trucks. Our capabilities include the design, engineering, testing and manufacture of automotive interior systems; seating systems; closure systems; body and chassis systems; vision systems; electronic systems; exterior systems; powertrain systems; roof systems; as well as complete vehicle engineering and assembly. We have approximately 80,000 employees in 243 manufacturing operations and 63 product development and engineering centres in 24 countries.
For more information, please contact:
Mr. David Toogood,
Jigsaw Communications Co., Ltd.
Tel: 02-253-2793
Magna International Inc.
337 Magna Drive
Aurora, Ontario L4G 7K1
Tel (905) 726-2462
Fax (905) 726-7164