Magna International (MGA) shares are on the rise in pre-market trading on Friday, following the release of the company’s third-quarter earnings report. While the results fell short of analysts’ expectations, the company’s outlook for the remainder of the year has investors optimistic.
Magna reported adjusted earnings per share of $1.28 for the third quarter, missing the consensus estimate of $1.41. Revenue also came in below expectations, reaching $10.28 billion compared to the anticipated $10.363 billion. The company attributed the decline in sales to a 4% decrease in global light vehicle production, with notable drops in North America, China, and Europe.
Despite the headwinds, Magna’s CEO, Swamy Kotagiri, expressed confidence in the company’s ability to navigate the challenging market environment. He highlighted the company’s commitment to optimizing value creation and announced the resumption of share repurchases in the fourth quarter, a move that was made ahead of schedule. This positive action suggests that Magna is confident in its future prospects.
While the third-quarter results were impacted by lower sales, Magna’s adjusted earnings before interest and taxes (EBIT) also reflected the pressure of higher production input costs and lower equity income. Additionally, the company’s sales were affected by the discontinuation of certain production programs and divestitures, though these were partially offset by new program launches and price increases to cover higher costs.
Looking ahead, Magna has revised its full-year 2024 sales outlook to a range of $42.2 billion to $43.2 billion, down from the previous estimate of $42.5 billion to $44.1 billion. The adjusted net income outlook has also been revised downward, now projected to be between $1.45 billion and $1.55 billion, compared to the previous range of $1.5 billion to $1.7 billion. Despite these adjustments, Magna’s outlook remains positive, indicating the company’s ability to adapt and navigate the challenging market landscape.
The market appears to be reacting favorably to Magna’s outlook, with MGA shares trading higher by 7.30% to $42.35 in pre-market trading. This surge suggests that investors are confident in the company’s ability to deliver on its revised guidance and navigate the ongoing industry headwinds.
