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Magna Q1 Profit Climbs, Adj. EPS Miss Estimates; Cuts FY19, FY21 Outlook

Automotive supplier Magna International Inc. (MG.TO,MGA) reported Thursday that its first-quarter net income attributable to the company was $1.11 billion, higher than last year's $660 million.

Earnings per share increased to $3.39 from $1.83 last year. Adjusted earnings per share were $1.63, compared to $1.84 a year ago.

Analysts had expected the company to earn $1.70 per share, according to figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items.

Adjusted EBIT decreased 18 percent to $720 million and adjusted EBIT margin dropped to 6.8 percent from 8.1 percent last year.

Sales of $10.59 billion decreased 2 percent from last year's $10.79 billion. Analysts also were looking for sales of $10.59 billion.

Global light vehicle production was down 7 percent.

Further, the company trimmed its forecast for fiscal 2019 mainly to reflect lower vehicle production globally.

The company now expects attributable net income of $1.9 billion to $2.1 billion, compared to previous outlook of $2.1 billion to $2.3 billion. Adjusted EBIT Margin is now expected to be 6.7 percent to 7.0 percent, down from 7.3 percent to 7.6 percent expected earlier. The company currently projects total sales of $39.1 billion to $41.3 billion, down from previous view of $40.2 billion to $42.4 billion.

Don Walker, Magna's Chief Executive Officer, said, "...In addition, we are seeing margin pressure in our Power & Vision segment related to higher program engineering and other costs for certain new ADAS programs and at a Getrag joint-venture in China due to lower than previously anticipated sales."

Further, the company updated 2021 outlook for one of its transmission joint ventures in China. Equity income has been reduced by $70 million as a result of lower than expected production volumes on programs to supply transmissions. The company now expects 2021 adjusted EBIT margin percentage to be in the 7.9 percent to 8.3 percent range, compared to a previous range of 8.1 percent to 8.5 percent.

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