Magna International Inc.’s MG-T top executive says the six-week auto workers’ strike in the United States cost the parts maker US$310-million in sales, with industry production falling by 220,000 vehicles.
But the Aurora, Ont.-based company still managed to raise its yearly outlook and posted higher sales and profit for the third quarter, as global auto production continued its recovery after pandemic-related disruptions.
The third-quarter results, which beat expectations, sent Magna’s share price soaring by 13 per cent in Friday trading on the Toronto Stock Exchange.
Magna, a maker of seats, automated driving systems and other components at factories around the world, saw sales rise 15 per cent year-over-year, to US$10.7-billion, in the three months ended Sept. 30. Excluding currency rates and other items, sales rose 10 per cent. This outpaces the overall car industry’s sales increase of 2 per cent, Magna chief executive officer Swamy Kotagiri told analysts on a conference call Friday.
The company posted a profit of US$394-million, or US$1.37 a share, compared with US$289-million, or US$1 a share, in the same quarter last year.
The auto industry is being buoyed by fewer supply chain disruptions, more reliable production schedules and rising sales, said Mr. Kotagiri, who warned that the rosier global outlook is at risk from higher labour costs, inflation and geopolitical turmoil.
“We remain highly focused on containing costs and improving our margins,” he said.
The effect of the United Auto Workers strike on sales was US$55-million in the third quarter and $255-million in the fourth.
The strike affected targeted factories of the three Detroit-based automakers: Ford Motor Co. F-N, Stellantis N.V. STLA-N and General Motors Co. GM-N. All are large buyers of Magna components. The strike ended about a week ago when negotiators reached tentative deals that must be finalized in ratification votes.
In Canada, Unifor has reached three-year collective agreements with Ford and GM, while the ratification vote for Stellantis workers ends Monday. GM and Stellantis workers in Canada held strikes of less than a day before tentative deals were hammered out.
Magna shares closed at $73.13 Friday, up 9 per cent, after falling 18 per cent since early September, weighed down by the UAW strike.
Jonathan Goldman, a stock analyst at Bank of Nova Scotia, said the share price had underperformed Magna’s peers and will rebound as investors react to the company’s strong quarter and increased financial outlook.
Magna reports sales separately for each of its four divisions and raised the 2023 outlook for each. The segments are body exteriors and structures; power and vision; seating; and complete vehicles. In the third quarter, every division posted higher sales except for complete vehicles, which saw revenue slip.
Eric Atkins