Magna International Inc, the global automotive supplier based off Canada, has announced it had modestly sliding second-quarter earnings because the strong US dollar overcame the surging vehicle output in North America.
Still, the company said its margins will rise this year, as automotive deliveries in both the United States and Canada were strong for the quarter due to continued availability of cheaper gasoline and dropping interest rates – with a shift towards higher margin sport utility vehicles and pickup trucks. Meanwhile, the dollar appreciated around 20 percent against the top currencies during the past twelve months, which means the profits from Canada, Europe and elsewhere were lower when converted into dollars. Magna announced currency translation alone had an impact of $890 million on sales during the period. But the company increased its 2015 delivery guidance to $30.9 billion to $32.6 billion from $30.8 to $32.5 billion, and said its operating margin for the year should reach around 8 percent, a step up from the high-7-percent range it expected back in May.
Back in April, the auto parts maker also divested much of its vehicle interiors business, typically a lower-margin operation, to Grupo Antolin from Spain and last month it has purchased closely held automotive transmissions producer Getrag. Magna is a top auto parts supplier and also engineers and assembles vehicles for carmakers, such as BMW’s Mini brand and Daimler’s Mercedes-Benz unit. Magna announced last month it was acquiring the German car parts maker Getrag for 1.75 billion euros ($1.91 billion) to increase the value of its automotive transmission systems business.