(RTTNews) - Canadian auto parts supplier Magna International Inc. (MGA: News , MG.A.TO) on Thursday reported a profit for the third quarter compared to a loss in the year-ago period, helped by restructuring actions and cost-cutting measures. However, revenues for the quarter declined 16% from last year, mainly on lower North American and European vehicle production. The company noted that North American vehicle production increased 32% from the preceding second quarter. Magna's quarterly results come just days after General Motors Co.'s decision to back out of a planned sale of its German unit Adam Opel GmbH to a consortium led by Magna.

Third-Quarter Results

The company's net income for the third quarter was US$51 million or US$0.45 per share, compared to net loss of US$215 million or US$1.93 per share in the year-ago period.

The year-ago quarter's results include certain unusual items totaling US$234 million or US$2.10 per share, comprising impairment charges of US$223 million or US$2.00 per share, restructuring chargers of US$4 million or US$0.04 per share, valuation allowance on future tax assets of US$123 million or US$1.10 per share, and a foreign currency gain of US$116 million or US$1.04 per share.

Excluding unusual items, net income for the latest quarter increased by $32 million or $0.28 per share from a year ago as a result of the increase in operating income partially offset by higher income taxes. On average, fourteen analysts polled by Thomson Reuters expected the company to report a loss of US$0.19 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the latest quarter declined 16% to US$4.67 billion from US$5.53 billion in the prior-year quarter, but topped analysts' consensus revenue estimate of US$4.53 billion for the quarter.

The company attributed the fall in sales to significant declines in vehicle production in North America and Europe in addition to decreases in assembly sales as well as tooling, engineering and other sales. However, these were partly offset by increases in North American content per vehicle and Rest of World sales.
Other Metrics

Magna's gross margin for the third quarter decreased to US$552 million from US$600 million last year, while gross margin as a percentage of total sales increased to 11.8% from 10.8% a year ago.

The company recorded an operating income of US$81 million for the quarter, compared to operating loss of US$112 million in the same period last year. Excluding unusual items, operating income for the quarter increased to US$81 million from US$34 million a year ago, primarily due to the benefit of restructuring activities and cost saving initiatives, a US$9 million favorable adjustment of the company's investment in asset-backed commercial paper and lower commodity costs.

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