Magna’s earnings report reflects broader industry trends as companies navigate the microchip shortage. The shortage has eased considerably from 2021 when more than 10 million vehicles were removed from automakers’ production plans. But millions more have already been lost this year, and the shortage is expected to continue well into 2023.
Sales in Magna’s body exteriors and structures unit surged 25 percent from a year earlier to $3.98 billion as global vehicle production jumped 24 percent in that time. The company also benefited from the launch of new programs in the last year, including the Ford F-150 Lightning, Rivian R1T and R1S and the Jeep Wagoneer.
Likewise, sales in the company’s power and vision unit gained 16 percent from a year earlier to $2.91 billion, while seating systems sales rose 15 percent to $1.3 billion. Both business units gained from the launch of new models worldwide, as well as improved global vehicle production levels.
Magna reported $1.21 billion in revenue from its complete vehicle assembly business, a decline of 3.3 percent from a year earlier. The supplier built 24,900 vehicles for automakers during the quarter, a 6.9 percent gain from 2021, but sales revenue fell as a result of the euro weakening against the U.S. dollar, Magna said.
The company slightly lowered its 2022 outlook, expecting net income of between $1.3 billion and $1.4 billion on the year, down from a previous estimate of up to $1.5 billion. It expects total sales of between $37.4 billion and $38.4 billion, down from a previous projection of between $37.6 billion and $39.2 billion.
Magna lowered its annual light-vehicle production estimates for North America and Europe by a combined 600,000 units, though it raised its full-year estimate for production in China by 1.1 million vehicles.
Europe remains a particularly uncertain region for Magna as it monitors the region’s supply of natural gas entering the winter months. In a regulatory filing, Magna said natural gas levels “appear to be adequate to avoid production disruptions” this winter, but a harsher-than-expected winter or unexpected supply chain shocks or demand spikes could change that.
The energy crisis is being driven in large part by the war in Ukraine, as Russia has choked off natural gas supplies to western Europe. As the war continues, Magna’s Russian operations remain “substantially idled,” the company said.
Magna, based in Ontario, ranks No. 4 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $36.2 billion in 2021.
