Updated February 10, 2024 14:34 IST
Magna, headquartered in Aurora, Ont., expects full-year profit to be in the range of $1.6 billion to $1.8 billion.
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Magna International: Canada-based auto parts supplier Magna International expects 2024 profits to be lower than expected, citing weak demand for electric vehicles (EVs) and inflationary pressures. As a result, the company’s U.S.-listed shares plunged 6% in morning trading.
The auto industry is facing challenges, with suppliers like Magna and rival BorgWarner grappling with rising labor and raw material costs, as well as weak demand for EV parts. Automakers have shifted their focus to higher-margin hybrid and gasoline-powered vehicles, contributing to the slump in the EV market.
Magna CEO Swamy Kotagiri said on a conference call with analysts that the expected adoption rate of EVs has lagged, negatively impacting the company’s expected sales growth in the short and medium term. He said there was.
Magna, headquartered in Aurora, Ont., expects full-year profit to be in the range of $1.6 billion to $1.8 billion, below the average analyst forecast of $1.9 billion based on LSEG data. Mr. Odagiri emphasized, “As macro issues continue, the industry appears to be shifting from supply constraints to demand constraints.”
The company reported adjusted earnings per share of $1.33 for the fourth quarter ended Dec. 31, below analysts’ expectations of $1.48. Fourth-quarter sales rose 9.2% to $10.45 billion, in line with Wall Street consensus, but with a weaker profit outlook, CFRA senior equity analyst Garrett Nelson said. The rating on Magna stock was maintained at “hold”.
Peer BorgWarner also on Thursday expected 2024 profits and sales to be lower than street expectations, pointing to broader challenges for the industry.
(Based on information from Reuters.)