Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Shares of Magna International Inc. rose more than eight per cent by mid-day Friday, after executives said the auto parts maker can grow despite a computer chip shortage plaguing the auto industry.

“With respect to the semiconductor shortage, we see near-term disruptions to [manufacturers’] production. However, at this point, any shortages is expected to be made up by the end of 2021,” Magna chief financial officer Vincent Galifi said on a conference call with analysts.

This year’s semiconductor shortage has led several auto companies, such as Stellantis and General Motors, to idle Canadian plants for periods of January or February. It comes on the heels of other recent assembly-line stoppages in North America, after the COVID-19 pandemic in 2020 and a union workers’ strike in the U.S. in 2019 significantly affected production.

Story continues below advertisement

But new chief executive Seetarama Kotagiri, who was previously chief technology officer and took over as top boss on Jan. 1, hinted that Magna has a high-tech investment strategy as auto makers have announced lofty commitments on electric vehicles and technology companies like Apple are deepening their auto expertise.

While Mr. Kotagiri sidestepped a question directly about making a car for Apple, he noted that electric vehicle company Fisker is not the only upstart on Magna’s radar. As it builds an electric vehicle with Fisker, Mr. Kotagiri said the company is keeping its eye on universities and early-stage companies as some car technology startups see ballooning valuations. Mr. Kotagiri also said that the company “booked a lot of business” in 2020, pointing to the company’s work on electric vehicles and LiDAR, a technology used in self-driving cars.

“I think the push towards electrification ... definitely has accelerated compared to what we’ve seen,” said Mr. Kotagiri. “Overall, we actually see this as an opportunity going forward. And not even talking about the new entrants and others that are able to contemplate entry into the market.”

The auto parts company, which keeps its books in U.S. dollars, said it expects net income attributable to the company to range from US$2.1-billion to US$2.3-billion this year. That would be a hike from the net income of US$757-million posted in 2020, as well as the US$1.77-billion net income attributable to the company in 2019. Mr. Kotagiri said the company was confident in the outlook, with over 90 per cent of sales already booked through 2023.

Magna also raised its quarterly dividend to 43 cents per share, up from 40 cents, as the company’s fourth-quarter profit and revenue rose from a year earlier and topped expectations.

The increased payment to shareholders came as Magna said it earned US$738-million or US$2.45 per diluted share for the quarter ended Dec. 31, up from a profit of US$440-million or US$1.43 per diluted share a year earlier. On an adjusted basis, Magna says it earned US$2.83 per diluted share for the quarter, up from an adjusted profit of $1.41 per diluted share in the fourth quarter of 2019.

Analysts on average had expected an adjusted fourth-quarter profit of US$2.02 and US$10.02-billion in revenue, according to financial data firm Refinitiv.

Story continues below advertisement

Sales totalled US$10.57-billion in the fourth quarter, up from $9.40-billion, as the company ramped up production after COVID-19 shut down manufacturing earlier in the year. In the first half of 2020, vehicle production had declined 20 per cent in North America amid the pandemic, the company said.

The company has also been cutting back, with plant closures and job cuts early in the COVID-19 pandemic, and winding down the supply chain for closed Ford plants in Brazil.

“When we think about 2020, the first few things that naturally come to mind are COVID-19, a difficult year, and life-changing year, each of which I know we can all relate to,” said Mr. Kotagiri.

“But bottom line, we are able to recover quickly. No one has been immune to the impacts of COVID, including the severe declines in industry production experienced in the first half of the year. However, production volumes started to recover at the end of the second quarter.”

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies