Magna reports loss of $148M for Q4

Auto parts maker and car builder Magna International Inc. has posted a fourth-quarter loss of $148 million US and is warning investors of a difficult 2009.

The Aurora, Ont.-based company said Tuesday its loss came in at $1.33 a share. In the same quarter of the previous year, Magna reported profit of $28 million, or 24 cents a share.

Sales decreased to $4.8 billion, down 29 per cent from the fourth quarter of 2007. Magna said it saw lower sales in all its geographic regions.

The company said its North American and European average dollar content per vehicle decreased four per cent and nine per cent, respectively, compared with the fourth quarter of 2007.

"We are facing one of the most difficult automotive environments in decades, across numerous markets," said Siegfried Wolf, Magna's co-chief executive. "Our recent financial results reflect this."

Don Walker, the company's other co-CEO, said the support — financial and otherwise — proposed by governments around the world is encouraging.

"It shows that many leaders recognize the significant contribution that the automotive industry makes to the economies of their respective countries and to the global economy," he said. "I believe certain governments have also come to recognize the vital role that automotive suppliers play in keeping the industry functioning.

"We are hopeful that governments will recognize the need to protect amounts owing to suppliers in any restructuring of the industry."

Full-year profit declines

For all of 2008, Magna's net income was $71 million, or 62 cents a share, down from $663 million, or $5.86 a share. Magna's 2008 sales came in at $23.7 billion, a decrease of nine per cent from 2007, due mainly to lower North American production sales and complete vehicle assembly sales.

The company said 2009 is expected to see massive restructuring among the automakers and Magna is projecting a tough year with lower projected vehicle sales.

"The bankruptcy of one or more of our major customers remains a significant negative risk to our business, including our results from operations, financial condition and cash flow, although the extent of risk is difficult to estimate," the company said.

However, Magna said it does see potential opportunities stemming from the upheaval in the auto industry, adding that its healthy balance sheet may allow it to benefit from consolidation in the parts supplier market.