Magna International Inc. today reported financial results for the third quarter ended September 30, 2012.
THREE MONTHS ENDED SEPTEMBER 30, 2012
We posted sales of $7.4 billion for the third quarter ended September 30, 2012, an increase of 6% from the third quarter of 2011. We achieved this sales increase in a period when vehicle production increased 15% in North America and declined 7% in Western Europe, both relative to the third quarter of 2011. In the third quarter of 2012, our North American and Rest of World production sales, as well as tooling, engineering and other sales increased, while European production sales and complete vehicle assembly sales decreased, in each case relative to the comparable quarter in 2011.
Complete vehicle assembly sales decreased 6% to $620 million for the third quarter of 2012 compared to $663 million for the third quarter of 2011, while complete vehicle assembly volumes decreased 9% to approximately 29,000 units.
During the third quarter of 2012, adjusted EBIT increased 23% to $352 million compared to $286 million for the third quarter of 2011.
During the third quarter of 2012, income from operations before income taxes was $500 million, net income attributable to Magna International Inc. was $390 million and diluted earnings per share were $1.66, increases of $336 million, $288 million and $1.24, respectively, each compared to the third quarter of 2011. During the third quarter of 2012, we recorded other income related to a re-measurement gain on the acquisition of the controlling 27% interest in Magna E-Car Systems Partnership (“E-Car”). This positively impacted income from operations before income taxes by $153 million, net income attributable to Magna International Inc. by $125 million and diluted earnings per share by $0.53 for the third quarter of 2012. During the third quarter of 2011, we recorded other expense relating to the disposal of an interior systems operation and the cost of entering into an agreement pertaining to the settlement of certain claims. These items negatively impacted income from operations before income taxes and net income attributable to Magna International Inc. by $124 million and diluted earnings per share by $0.52 for the third quarter of 2011.
During the third quarter ended September 30, 2012, we generated cash from operations of $503 million before changes in non-cash operating assets and liabilities, and invested $63 million in non-cash operating assets and liabilities. Total investment activities for the third quarter of 2012 were $363 million, including $279 million in fixed asset additions, $28 million in investments and other assets and $56 million to purchase subsidiaries.
NINE MONTHS ENDED SEPTEMBER 30, 2012
We posted sales of $22.8 billion for the nine months ended September 30, 2012, an increase of 6% from the nine months ended September 30, 2011. This higher sales level reflected increases in our North American, European, and Rest of World production sales as well as higher tooling and engineering and other sales, partially offset by lower complete vehicle assembly sales.
During the nine months ended September 30, 2012, vehicle production increased 20% to 11.6 million units in North America and decreased 7% to 9.6 million units in Western Europe, each compared to the first nine months of 2011.
Complete vehicle assembly sales decreased 10% to $1.9 billion for the nine months ended September 30, 2012 compared to $2.1 billion for the nine months ended September 30, 2011, while complete vehicle assembly volumes decreased 8% to approximately 92,000 units.
During the nine months ended September 30, 2012, adjusted EBIT increased 22% to $1.3 billion compared to $1.0 billion for the nine months ended September 30, 2011.
During the nine months ended September 30, 2012, income from operations before income taxes was $1.4 billion, net income attributable to Magna International Inc. was $1.1 billion and diluted earnings per share were $4.60, increases of $483 million, $376 million and $1.71, respectively, each compared to the first nine months of 2011. During the nine months ended September 30, 2012, we recorded other income related to a re-measurement gain on the acquisition of the controlling 27% interest in E-Car. This positively impacted income from operations before income taxes by $153 million, net income attributable to Magna International Inc. by $125 million and diluted EPS by $0.53 for the nine months ended September 30, 2012. During the nine months ended September 30, 2011, we recorded other expense relating to the disposal of an interior systems operation, the cost of entering into an agreement pertaining to the settlement of certain claims, the write down of real estate, and a gain on disposal of an equity accounted investment. These items negatively impacted income from operations before income taxes and net income attributable to Magna International Inc. by $123 million and diluted earnings per share by $0.50 for the nine months ended September 30, 2011.
During the nine months ended September 30, 2012, we generated cash from operations before changes in non-cash operating assets and liabilities of $1.6 billion, and invested $487 million in non-cash operating assets and liabilities. Total investment activities for the first nine months of 2012 were $972 million, including $796 million in fixed asset additions, a $97 million increase in investments and other assets and $79 million to purchase subsidiaries.
A more detailed discussion of our consolidated financial results for the third quarter and nine months ended September 30, 2012 is contained in the Management’s Discussion and Analysis of Results of Operations and Financial Position and the unaudited interim consolidated financial statements and notes thereto, which are attached to this Press Release.
DIVIDENDS
Today, our Board of Directors declared a quarterly dividend of $0.275 with respect to our outstanding Common Shares for the quarter ended September 30, 2012. This dividend is payable on December 14, 2012 to shareholders of record on November 30, 2012.
NORMAL COURSE ISSUER BID
Subject to approval by the Toronto Stock Exchange and the New York Stock Exchange, our Board of Directors approved a normal course issuer bid to purchase up to 12.0 million of our Common Shares. This new normal course issuer bid is expected to commence on or about November 13, 2012 and will terminate one year later.
OTHER MATTERS
We also announced that Frank Stronach, Magna’s Founder and Honorary Chairman has decided to step down as a member of Magna’s Board of Directors, effective immediately.
Magna’s Chairman, Bill Young, stated: “On behalf of the Board, I would like to thank Frank for his enormous contribution to Magna’s success over the past six decades.”
Frank Stronach commented: “It has been two years since control of Magna has changed hands and, in that time, I have become involved in numerous activities outside of the automotive industry. One of these activities involves politics in Austria and I do not want my political views to be confused with my role on Magna’s Board. As a result, I feel the time is right to step down as a member of Magna’s Board. Magna is in excellent hands, with a seasoned management team and very capable Board members. Of course, as Honorary Chairman, I will always be available to provide any guidance that management or the Board requires.”
Don Walker, Magna’s Chief Executive Officer added: “Personally and on behalf of all our employees, I would like to thank Frank for all he has done for this company. Also, I would like to assure all our stakeholders that we remain fully committed to the Corporate Constitution, Employee Charter and Operational Principles. These and other elements of the Fair Enterprise culture that Frank founded have been the cornerstone of Magna’s success over the years and we expect they will be key to our future success.”
| Three months ended September 30 | Nine months ended September 30 | |||
| 2012 | 2011 | 2012 | 2011 | |
| Sales | $7,411 | $6,970 | $22,804 | $21,497 |
| Adjusted EBIT(1) | $352 | $286 | $1,271 | $1,046 |
| Income from operations before income taxes | $500 | $164 | $1,409 | $926 |
| Net income attributable to Magna International Inc. | $390 | $102 | $1,082 | $706 |
| Diluted earnings per share | $1.66 | $0.42 | $4.60 | $2.89 |
| All results are reported in millions of U.S. dollars, except per share figures, which are in U.S. dollars. | ||||
(1) Adjusted EBIT is the measure of segment profit or loss as reported in the Company’s attached unaudited interim consolidated financial statements.
Adjusted EBIT represents income from operations before income taxes; interest expense (income), net; and other (income) expense, net
