DDAIF Mercedes Benz Group AG (PK)

Magna International Inc. (MGA) revealed that it expects consolidated sales between $27.8 billion and $29.3 billion for full year 2012 based on its growth opportunities outside traditional markets, strong position in North America and improving results in Europe. It is flat compared with the sales guidance of $28.1 billion and $28.9 billion for full year 2011.

The company expects consolidated production sales between $23.6 billion and $24.7 billion assuming light vehicle production volumes of 13.6 million units in North America and 13.0 million units in Western Europe for the full year. It also expects complete vehicle assembly sales between $2.3 billion and $2.6 billion for the year.

Considering the geographic regions, Magna anticipates production sales between $13.2 billion and $13.7 billion in North America, $8.4 billion and $8.7 billion in Europe and $2.0 billion and $2.3 billion in Rest of World for the year.

Meanwhile, the company stated that operating margins for the full year is expected to be 5% and the effective income tax rate to be 26%, all excluding unusual items. In addition, the company anticipates capital expenditures to be $1.3 billion–$1.5 billion for the year in order to support the expansion in high-growth markets as well as new and replacement business in its traditional markets.

Aside from full-year 2012, Magna also released its sales outlook for 2012-2014. The company expects a net increase in total production sales of $3.2 billion over the two-year period, based on light vehicle production volumes of 15.4 million units in North America and 14.2 million units in Western Europe during 2014. 

Considering the geographic regions, the company expects the net increase in total production sales of 50% in North America, 15% in Europe and 35% in Rest of World as a percentage of overall net increase.

Magna, a Zacks #3 Rank (Hold) stock, is a leading manufacturer and supplier of automotive components based in Aurora, Canada. The company designs, develops and manufactures automotive systems, assemblies, modules and components, besides engineering and assembling complete vehicles, primarily for sale to OEMs of cars and light trucks. It has yet to release its fourth quarter sales and earnings results for 2011.

The company’s major customers include BMW, Chrysler/Fiat, Daimler (DDAIF), Ford Motor (F), General Motors (GM) and Volkswagen (VLKAY). They constitute more than 80% of its total revenues.

The company earned $226 million or 94 cents per share in the third quarter of 2011 compared with $256 million or $1.10 per share in the same quarter a year ago. Revenues increased 21% to $6.97 billion driven by higher sales across all its operations. Gross profit improved 2% to $769 million, despite a 24% rise in cost of goods sold to $6.20 billion.

 
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