Magna takes $1.2B hit on shutdowns
Autoparts maker says COVID-19’s effect tops blow from 2008 crisis
Magna International Inc. says COVID-19 shutdowns of automotive production caused a $1.2 billion (U.S.) drop in its earnings and $5.5 billion hit to sales in the second quarter.
The autoparts maker says the impact was far worse than the quarterly declines during the 2008-09 financial crisis as it lost $647 million, or $2.17 per diluted share, in the second quarter, compared with a profit of $452 million, or $1.42 per share, a year earlier.
Reporting in U.S. dollars, its adjusted loss was $1.71 per share, down from a $1.59 per share profit in the prior year.
Revenue for the three months ended June 30 plunged nearly 58 per cent to $4.3 billion, compared with $10.1 billion in the second quarter of 2019.
Magna was expected to report an adjusted loss of $1.57 per share on $4.1 billion of revenues, according to financial markets data firm Refinitiv.
The Ontario-based company says global light vehicle production was down 42 per cent while production in its two largest markets in North American and Europe were down 70 and 59 per cent respectively.
“While our second quarter results were impacted by a precipitous decline in global vehicle production caused by the COVID-19 pandemic, I am pleased we have been able to successfully and safely restart operations at our plants around the world,” said CEO Don Walker. “Additionally, we have taken several actions across the company to reduce our cost structure to be aligned with our updated expectations for future vehicle production. We expect our second half 2020 results to begin to reflect these actions. I am confident that Magna will emerge from the recent economic upheaval as strong as ever.”