Magna International, the Canada-based auto parts supplier, has announced it accumulated sales during the first quarter that exceeded expectations, buoyed by increased demand coming from the United States clients.
The automotive parts maker has also divested last month the better part of its vehicle interiors unit, which is a low yielding earnings margins business traditionally, selling most of its assets to Grupo Antolin from Spain. Corroborated with the better sales during the first three months of the year and the sale of the low profit interiors division, the company opted to lift its operating margin prediction for the entire year when it reported the first quarter financial results. The group was buoyed by increased demand coming from the United States, where auto sales have been on the rise thanks to easy credit access and the continued availability of lower priced gas. The company’s three-months sales were impacted negatively by the dollar appreciation, with the currency swings being a major issue for the group that has almost 50 percent of total revenue from outside North America. So far in the past year the dollar has risen by 19 percent against other major currencies, making sales in other regions less valuable.
Magna said its sales forecast for the entire year would go down from $33.1 – $34.8 billion to a range between $30.8 to $32.5 billion, while the company still expects its earnings margin to rise towards the high-7 percent zone, up from the previous forecast that set in the low-7 percent range. For the quarter ending March 31 the revenue slid 7 percent to $8.33 billion as the strong dollar cut sales by around 4880 million. Total net income for the three months period jumped 18 percent to $465 million.