Magna Posts Record Numbers, Remains Cautious About Outlook

Auto parts maker Magna International Inc. posted strong numbers, but remains cautious about North American and European vehicle production volumes in the second half of 2002 due to uncertainty about general economic conditions.
Quoting figures in U.S. dollars, sales for the six months ended June 30, 2002 were a record $6.4 billion, an increase of 13% over the six months ended June 30, 2001. The Company earned record net income from operations in the six months ended June 30, 2002 of $323 million, representing an increase over the six months ended June 30, 2001 of 7% or $20 million, of which $9 million relates to the elimination of amortization of goodwill and indefinite life intangible assets. Net income for the six months ended June 30, 2002 was $312 million.
The company posted record sales of $3.3 billion for the second quarter ended June 30, 2002, an increase of 16% over the second quarter of 2001. The higher sales level in the second quarter of 2002 reflects increases over the comparable quarter of 38% in European content per vehicle, 2% in North American content per vehicle, and 16% in tooling and other automotive sales. During the second quarter of 2002, North American vehicle production increased approximately 7% and European vehicle production decreased approximately 4% from the comparable period.
For the third quarter of fiscal 2002, the company expects average dollar content per vehicle to range between $425 and $440 in North America and between $215 and $235 in Europe. In addition, the Company has assumed that third quarter fiscal 2002 vehicle volumes will be approximately 3.8 million units in North America and 3.6 million units in Europe.
Based on expected average dollar content per vehicle in North America and Europe, the above volume assumptions and anticipated tooling and other automotive sales, Magna expects its automotive sales for the third quarter of fiscal 2002 to be between $2.6 billion and $2.8 billion and diluted earnings per share from operations to be in the range of $1.10 to $1.30.
The company expects full year fiscal 2002 average dollar content per vehicle to range between $425 and $440 in North America and between $215 and $235 in Europe. Further, the company is forecasting fiscal 2002 production volumes of approximately 16.3 million units in North America and approximately 16.2 million units in Europe.
Based on expected average dollar content per vehicle in North America and Europe, the above volume assumptions and anticipated tooling and other automotive sales, Magna expects its automotive sales for the full year fiscal 2002 to range from $11.5 billion to $12.3 billion, compared to fiscal 2001 automotive sales of $10.5 billion.
In addition, diluted earnings per share from operations for fiscal 2002 are expected to be in the range of $5.90 to $6.20, compared to fiscal 2001 earnings per share from operations of $5.77, adjusted to reflect the elimination of amortization of goodwill and indefinite life intangible assets. In addition, the company expects that full year fiscal 2002 spending for fixed assets for its automotive business will be in the range of $650 million to $700 million, compared to $486 million in fiscal 2001.