DNZOY Denso Corp Ltd (PK)

Magna International Inc. (MGA) reported earnings per share of $1.57 in the first quarter of 2013, up 7.5% from $1.46 in the year-ago quarter and outpaced the Zacks Consensus Estimate of $1.40. Net income increased 7.6% to $369.0 million from $343.0 million in the year-ago quarter.

Revenues went up 9.1% to $8.4 billion in the reported quarter, exceeding the Zacks Consensus Estimate of $7.9 billion. The increase was driven by improvement in North American and Rest of World (ROW) production sales and higher tooling, engineering and other sales.

Vehicle production rose 1% to 4.0 million units in North America. However, production declined 9% to 4.8 million units in Europe. Operating income increased 4.1% to $457.0 million in the quarter from $439.0 million in the year-ago quarter.

Segment Details

Revenues from External Production Sales (comprising North America, Europe and ROW units) went up 5.5% to $7.0 billion in the reported quarter. Revenues from North America increased 3% to $4.0 billion, driven by the launch of new programs and completion of acquisitions.

Revenues from Europe went up 5% to $2.4 billion in the period. The year-over-year improvement was attributable to the launch of new programs and completion of acquisitions, partially offset by a decrease in production volume in certain existing programs. Revenues from ROW augmented 26% to $516.0 million due to the launch of new programs in Brazil and China.

Revenues from the Complete Vehicle Assembly segment went up 33% to $798.0 million in the quarter with a 25% rise in assembly volumes to 37,439 units. Revenues from Tooling, Engineering & Other expanded 31% to $554.0 million in the quarter.

Financial

Magna International had $1.2 billion in cash and cash equivalents as of Mar 31, 2013, compared with $1.5 billion as of Dec 31, 2012. The company had long-term debt of $350.0 million as of Mar 31, 2013 compared with $361.0 million as of Dec 31, 2012. Long-term debt to capitalization ratio was 3.5% as of Mar 31, 2013 versus 3.7% as of Dec 31, 2012.

In the first three months of 2013, the company’s cash flow from operations decreased 34.1% to $151.0 million compared with $229.0 million a year ago. Capital expenditures declined 22.4% to $194.0 million in the period compared with $250.0 million in the first quarter of 2012.

Outlook

For full-year 2013, Magna expects revenues in the External Production segment between $27.2 billion and $28.2 billion. Complete Vehicle Assembly sales are projected in the range of $2.8 billion to $3.1 billion.

Total revenue of the company is expected between $32.6 billion and $34.0 billion for the year. Operating margin is expected in the mid-5% range with a tax rate of 24% for the year. Capital expenditures for the year are expected to be $1.4 billion.

Our Take

Magna International, based in Aurora, Canada, is a leading manufacturer and supplier of automotive components. The company designs, develops and manufactures automotive systems, assemblies, modules and components, besides engineering and assembling complete vehicles, primarily for sale to original equipment manufacturers (OEMs) of cars and light trucks. The company currently carries a Zacks Rank #3 (Hold).

Few stocks that are performing well in the industry where Magna operates include Visteon Corp. (VC), Tower International, Inc. (TOWR) and Denso Corp. (DNZOY). All these companies carry a Zacks Rank #1 (Strong Buy).

 

 
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