Canadian auto supplier Magna International Inc. joined many of its North American peers in reporting a massive drop in revenue and posting a sizable loss for the second quarter, but showed signs of progress toward the end of the quarter as auto production resumed amid the pandemic.
Magna on Friday said it swung to a net loss of $647 million from a gain of $452 million during the same quarter last year. Total sales plunged about 58 percent to $4.29 billion, but topped estimates of $4.10 billion.
In a statement, Magna said the quarterly losses “far exceeded the worst comparable quarterly declines experienced during the 2008-2009 financial crisis.”
The diversified parts supplier is the latest of several major automakers to report losses this week as its customers shut production amid government-enforced lockdowns. Light-vehicle production in North America, Magna’s biggest market, tumbled about 70 percent in the period. BorgWarner, Lear, Adient and Tenneco all reported similar results.
But as economies reopen following easing of the lockdowns, North America auto sales have gradually recovered since hitting a bottom in April, resulting in major automakers scrambling to ramp up production and boost weak inventories at dealerships.
That has lifted sales at several auto suppliers including Canada’s Magna, which makes parts such as body structures, chassis and powertrain for customers such as General Motors, which accounts for about 15 percent of Magna’s annual revenue.
“While our second quarter results were impacted by a precipitous decline in global vehicle production … I am pleased we have been able to successfully restart operations at our plants around the world,” Chief Executive Officer Don Walker said in a statement. “I am confident that Magna will emerge from the recent economic upheaval as strong as ever.”
Magna, based near Toronto, had pulled its full-year financial outlook in March, and now expects 2020 sales between $30 billion and $32 billion, above analysts’ estimate of $30.2 billion, according to IBES data from Refinitiv.
However, the sales target is still down between 19 percent and 24 percent compared with a year earlier.
On an adjusted basis, Magna lost $1.71 per share in the quarter ended June 30, bigger than analysts’ estimates of a loss of $1.57 per share.
Magna ranks No. 3 on the 2020 Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $39.43 billion in 2019.
Philip Nussel of Automotive News and Reuters contributed to this report.
