* Sees 2013 total sales of $32 bln-$33.4 bln
* Sees 2013 total production sales of $27 bln-$28 bln
* Expects $150 mln restructuring charge in 2013
* Increases dividend by 16 percent to 0.32 cents
By Solarina Ho
TORONTO, March 1 mgCanadian auto parts maker
Magna International Inc raised its full-year
sales forecast on Friday and sweetened its quarterly dividend
after a fourth-quarter performance that beat expectations.
Shares of Magna, one of the world's largest parts makers,
rose after it said its North American operations helped drive
total sales last year to a record high. That mirrored a robust,
double-digit recovery for vehicle sales in the United States.
The Aurora, Ontario-based company, which is sitting on about
$1 billion in cash, also raised its quarterly dividend by 16
percent, to a record 32 cents a share.
"When you put all that together ... the stock is reacting
positively on a pretty choppy day in the market," said Todd
Coupland, an analyst at CIBC.
Magna shares rose as much as 5.7 percent on Friday. The
stock has gained roughly 28 percent in the past six months.
The fortunes of Canadian auto parts makers are tightly tied
to the Detroit Three and the health of the U.S. vehicle market,
and the parts makers have benefited from the steady recovery of
Ford Motor Co, General Motors Co and Fiat SpA's
Chrysler from their recession-induced slump.
Coupland said the outlook is positive, particularly in light
of U.S. figures released on Friday that showed the auto industry
was on track for a fourth straight month of strong sales.
"People are saying the strength that we saw in 2012 can't
continue, yet it has so far in 2013 and the reason is you're
getting a kicker, or a tailwind from better (U.S.) housing
starts," he said.
WORDS OF CAUTION
Some analysts were less bullish. David Tyerman, an analyst
at Canaccord Genuity, cautioned that while U.S. auto sales are
forecast to outpace the growth of U.S. economy this year, they
are expected to fall back into single digits.
"Based on the guidance they provided so far and what's going
on in the industry as a whole, we're going to see a slowing in
the results for (Magna) in 2013 and it will probably continue
into 2014," Tyerman said. "You can only grow double digits so
long in an industry that isn't growing double digits normally."
Even so, Magna bumped up its 2013 sales forecast to a range
of $32 billion to $33.4 billion from a range of $31.3 billion to
$32.7 billion. Last year, the company posted sales of $30.84
billion, an increase of 7 percent year over year.
It forecast total production sales at between $27 billion
and $28 billion, up from the $26.5 billion to $27.5 billion
range it had forecast in January.
Production sales are sales from Magna's core business of
manufacturing vehicle parts and exclude its smaller
vehicle-assembly and tooling operations.
STRONG NORTH AMERICAN SALES
Fourth-quarter profit rose to $351 million, or $1.49 a
share, from $312 million, or $1.32, a year earlier. The latest
figure topped analysts' average forecast of $1.14 a share.
Sales for Magna, which makes parts ranging from mirrors and
auto bodies to electronics and powertrain systems, rose 11
percent to $8.03 billion, in the quarter, exceeding analysts'
$7.74 billion forecast.
The company said North American production sales increased
12 percent in the quarter to $3.9 billion, largely reflecting a
12 percent increase in vehicle production to 3.8 million units.
It expects to take a restructuring-related charge of about
$150 million this year.
Magna, which also manufactures complete vehicles on a
contract basis, has been pushing to turn around inefficient
operations in Europe.
CIBC's Coupland said Europe, where production sales rose
just 2 percent in the fourth quarter, is the biggest risk factor
Magna, whose competitors include Johnson Controls Inc
and TRW Automotive Holdings Corp, posted an
overall loss last year for operations in what it calls the rest
of the world, generally outside North America and Europe. The
segment is a key focus area for Magna, which is investing
heavily in China.
South American operations were challenging, the company
said, due to a combination of start-up costs, inefficiencies,
currency issues, and negotiations with customers.
The company also said it was looking at how to use its large
"We're looking at it a lot. Not going to talk specifically
about what we're going to do, obviously, until we get something
complete, but it's a high priority," Chief Executive Don Walker
said during a conference call with analysts.
"We don't want to be sitting on $1 billion of cash just to
be sitting on $1 billion of cash."
Shares of Magna closed C$2.17 higher at C$57.02 on the
Toronto Stock Exchange on Friday and up $2.29 at $55.51 on the
New York Stock Exchange.