Auto parts maker Magna International Inc on Friday reported better-than-expected quarterly revenue and forecast full-year sales above estimates, as vehicle production in North America showed signs of a recovery from the COVID-19 pandemic.
The company said it lost about $5.5 billion in sales during the second quarter, as its customers shut production amid government-enforced lockdowns. Light-vehicle production in North America, Magna’s biggest market, tumbled 70% in the period.
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 including Ford Motor and Volkswagen.
“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.
Ontario-based Magna 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% and 24% compared with a year earlier.
Earlier this week, U.S. auto parts makers BorgWarner Inc also reported a smaller-than-expected second-quarter loss and raised its full-year free cash flow outlook amid rebounding auto production.
On an adjusted basis, Magna lost $1.71 per share in the quarter ended June 30, bigger than estimates of a loss of $1.57 per share.
Total sales plunged about 58% to $4.29 billion, but topped estimates of $4.10 billion.
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