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Magna International Inc. , riding a rebound in North American and European vehicle production, has boosted its dividend for the second consecutive quarter and reported record annual profit.

The Canadian auto parts giant raised its dividend to 25 cents (U.S.) a share from 18 cents in the previous quarter, but also raised its cash pile to $2.1-billion. It posted a $1.5-billion turnaround in annual results to a profit of $973-million for the year, compared with a loss of $493-million in 2009.

"We are positioned to capitalize on continued growth in global vehicle production in 2011 and beyond as we further expand our manufacturing footprint in a number of growing regions of the world," Magna chief executive officer Don Walker said in a statement accompanying the financial results.

The growing cash pile leaves Magna in a strong position to finance acquisitions, as well as its 2011 capital spending program that will amount to between $1-billion and $1.1-billion.

Mr. Walker has said the company will move toward a more cash-neutral position. It made major moves to shower some of its cash on shareholders in its third-quarter financial statement when it boosted the dividend to 18 cents and announced a stock split and share buyback.

Those actions reflect a more shareholder-friendly atmosphere at the company since the controversial $863-million buyout last year of founder Frank Stronach's multiple voting shares in the company. Mr. Stronach remains chairman, but the company has also initiated a search for independent directors to add to its board.

"Our strong earnings and cash flow generation over the past year has enabled our board to increase our dividend for the third time since we re-established our quarterly dividend last May," chief financial officer Vince Galifi added.

Fourth-quarter sales rose as did the value of Magna's parts in the average North American and European vehicle (a measurement known as content per vehicle). The 88-cent-a-share profit reflected record fourth-quarter profit, but was less than the $1.02 consensus of analysts' estimates.

Investor reactions to comments from management on the company's conference call Wednesday evening will determine whether the company is punished for missing the consensus estimate, said David Tyerman, who follows Magna for Canaccord Genuity in Toronto.

"The big dividend hike should be well received by shareholders," Mr. Tyerman said.

The full-year results reflect the increase in vehicle production in the company's two key markets of North America and Western Europe and the company's moves during the crisis that gripped the global auto industry in 2008-09 to restructure some of its operations and slash costs.

Vehicle production rose 33 per cent in North America last year from 2009 levels, which reflected the collapse of Chrysler LLC and General Motors Co., two of Magna's largest customers, into Chapter 11 bankruptcy protection.

In Europe, vehicle output rose 12 per cent last year from 2009 levels.

The results were also affected by the company's efforts to improve underperforming operations around the world, Magna said.

In addition to fixing problem plants, Magna has been shifting its manufacturing footprint, by expanding in low-cost and emerging markets, while scaling back operations in high-cost areas.

Magna executives said during an outlook presentation last month that it has closed or consolidated 74 plants in the past five years in Canada, the United States and Western Europe. Meanwhile, it has opened 20 in Mexico, 23 in Asia excluding Japan and 18 in central and eastern Europe since 2001.

The company's strategy is to continue expansion in high-growth and developing markets, while diversifying its customer base and continuing to invest in innovation.

"We expect this strategy to be implemented both through organic growth as well as targeted acquisitions," Magna said.

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