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Magna CEO proposes fine-tuning its portfolio of auto parts

File photo of Donald Walker, CEO of Magna International Inc.

Fred Lum/Fred Lum/The Globe and Mail

Magna International Inc. is looking at streamlining the vast portfolio of products it sells to auto makers, chief executive officer Don Walker says.

An examination of the product portfolio – which could be concluded by the end of the year – will look at reducing product areas to 30 or 25 from 35 to 40 now, Mr. Walker told analysts and investors on a conference call Friday.

Magna's products range from frames for pickup trucks and complete seating systems for all vehicles to mirrors, door latches and parts for engines and transmissions, all of which helped generate sales of $30.84-billion (U.S.) in 2012.

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Sales outside the company's key bastions of North America and Europe are growing rapidly, Mr. Walker said, "but we need to get a step change there."

"In the areas where we're strong in products, if we can make some acquisitions to get us bigger faster, that would be a good combination to do with continued greenfield expenditures."

Much of that spending on new plants is being done in the growing automotive markets of China, South America and Eastern Europe.

"As we're looking at fine-tuning our product portfolio, we are looking at where the opportunities [are], we know we've got priorities for where we want to grow. Obviously in the rest of the world segment, specifically over in Asia, that's where the market is growing," Mr. Walker said.

He made his comments as Magna reported a profit of $1.43-billion in 2012, up 41 per cent from $1.018-billion in 2011.

The strong annual results, combined with a fourth-quarter profit that rose 13 per cent and a cash pile that sits at $1.5-billion, led the company to boost its dividend by 16 per cent effective March 13.

The dividend rises to 32 cents a share from 27.5 cents.

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Magna's shares rose $2.17 or 4 per cent to close at $57.02 (Canadian) in trading on the TSX after the results were released Friday.

In addition to the dividend increase, Magna said the outlook for 2013 has brightened in the six weeks since it released its original forecast for the year in January.

Magna is forecasting that auto makers will make 15.8 million vehicles in North America this year, up from its earlier forecast of 15.3 million.

While European vehicle production is expected to hit 11.9 million, down from the 12 million forecast in January, the weakening of the euro against the U.S. dollar will help boost revenue.

Sales are now forecast to be in the range of $32-billion (U.S.) to $33.4-billion this year, compared with the earlier forecast of $31.3-billion to $32.7-billion.

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