UPDATED: 8/8/18 4:22 pm ET – adds batch close
TORONTO — Diversified Canadian retailer Magna International Inc. reported a 13 percent year-over-year benefit in second-quarter net income on record sales, even as it lowered a opinion for 2018 in response to tariffs.
Magna on Wednesday said it warranted $636 million in a entertain finished Jun 30, adult from $561 million a year earlier. Sales rose 12 percent over a same time duration to $10.3 billion.
Sales rose in any of a regions Magna operates, yet most of a expansion was driven by Europe. European sales surged 28 percent to $4.3 billion. Sales in North America, Magna’s largest market, gained 3 percent to $5.2 billion, notwithstanding reduce light-vehicle production, while sales in Asia increasing 7 percent to $697 million.
The record income and aloft gain came notwithstanding tariffs released by a Trump administration, reduce sales in a finish car public business and lower-than-expected opening of a joint-venture delivery module in Europe and China.
“We positively had some headwinds this quarter,” Magna CEO Don Walker pronounced on a call with investors. “But even with that, we posted a good quarter.”
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The association lowered a 2018 opinion in response to those headwinds. It anticipates North American light-vehicle prolongation during 17.2 million units on a year, down from 17.3 million, and sum sales of between $40.3 billion and $42.5 billion, down from between $40.9 billion and $43.1 billion.
Magna shares fell 8.2 percent to tighten a day during $54.39 in New York.
“Our updated opinion for 2018 almost reflects a strengthening U.S. dollar, reduced equity income from corner ventures in a delivery business, and a estimated impact of tariffs,” Magna CFO Vince Galifi pronounced in a statement.
Magna expects tariffs to harm a gain commencement in a third quarter, with an estimated second-half impact of about $30 million. Most of that impact will be felt during Magna’s U.S. plants, with a plants in Canada and Mexico influenced to a smaller degree, due to aloft steel and aluminum import costs and tariffs on products alien from China.
The Trump administration in May put a 25 percent tariff on steel imports and a 10 percent tariff on aluminum from Canada, Mexico and a European Union. The White House has also mulled a 25 percent tariff on imports of vehicles and automobile parts, an thought a automobile attention has heavily criticized.
Despite concerns over tariffs, Walker pronounced there is some reason for confidence with renegotiations of a North American Free Trade Agreement. A turn of NAFTA talks between a U.S. and Mexico have entered their third week as discussions around automotive calm takes core stage.
“Logic would contend that all that’s function here to try and put vigour to get a final traffic on NAFTA,” Walker said. “But a longer this goes on, and we consider everyone’s wakeful of this, a worse it is for NAFTA, including a U.S.”
Second-quarter sales in Magna’s physique exteriors and structures business rose 11 percent to $4.6 billion. New module launches, including a Chevrolet Traverse and Jeep Cherokee, equivalent a decrease in prolongation volume in other vehicles it supplies.
Revenue in a powertrain and lighting business jumped 11 percent to $3.2 billion on new programs, notwithstanding a troubles with a unnamed delivery corner venture. Seating sales gained 4 percent to $1.4 billion.
Contract public grows
Revenue from Magna’s car public business, in that it builds vehicles for automakers including Mercedes-Benz and BMW, surged 47 percent to $1.3 billion. It built about 33,500 vehicles in a second quarter, adult from 21,300 a year earlier.
The increasing sales volume did not interpret into aloft gain during a finish vehicles business. The unit’s practiced gain before seductiveness and taxes fell to $1 million from $15 million a year earlier.
Magna pinned a decrease in a car public gain on lower-than-expected prolongation of a Mercedes-Benz G-class SUV “partly due to dual separate retailer issues on a launch of a program.”