Auto parts supplier Magna’s quarterly results miss on fewer vehicle assemblies

08/02/2024

1 minute read

2024.08.02 11:51

By Nathan Gomes

(Reuters) -Canada’s Magna International (NYSE:) missed analysts’ estimates for second-quarter results, hurt by production being stopped for certain vehicles and lower volumes of automobiles assembled, sending the auto parts supplier’s shares down about 2%.

The company, which counts BMW (ETR:), Mazda and Ferrari (NYSE:) as customers, produces parts and builds vehicles at its complete vehicle manufacturing unit for various automakers.

There were layoffs at Magna’s complete vehicle operations, the company said on Friday, adding that the job cuts started earlier this year.

“Sales were negatively impacted by the end of production of certain programs, lower complete vehicle assembly volumes, including as a result of the end of production of the BMW 5-Series,” Magna said.

The company expects INEOS Automotive’s vehicle program cancellation to lead to about $700 million in lost sales. In May, Magna recorded asset impairments and restructuring costs of $316 million related to embattled EV startup Fisker (OTC:).

Demand for automotive parts and services had risen over the past few years, but that has taken a hit with automakers shifting away from their costly electric vehicle plans to focus on gas-powered models.

Magna’s complete vehicle unit is a drag on consolidated margins, CFRA analyst Garrett Nelson said, adding that Fisker’s bankruptcy and challenges of other EV makers have become a significant headwind for the supplier.

Rival Aptiv (NYSE:) beat Wall Street expectations for quarterly profit on Thursday. However, revenue from the company’s segment which makes electrical components declined 3% due to a reduction in production by some customers.

Ontario-based Magna lowered its 2026 sales forecast range to $44.0 billion to $46.5 billion, compared with its prior view of $48.8 billion to $51.2 billion.