Toronto, Ontario — In this weekly Tuesday Ticker, Magna reports better-than-expected Q3 financials—yet still lowers its guidance amid global vehicle production slumps. Meanwhile, Ford warns investors that it will hit the ‘lower end’ of predicted earnings in 2024.
Production problems
Shares of Magna International rose 7.8 percent following better-than-expected Q3 2024 results—though the Ontario-based auto parts manufacturer lowered its 2024 guidance amid global vehicle production slumps.
The company now expects total sales for 2024 between US$42.2 billion and US$43.2 billion, compared with earlier expectations for between US$42.5 billion and US$44.1 billion. Net income for Q3 2024 is US$484 million, up from US$394 million in the same quarter last year.
Profits for the quarter amounted to US$1.68 per diluted share, compared to US$1.46 per share in Q3 2023. On an adjusted basis, Magna earned US$1.28 per diluted share, down from adjusted profits of US$1.46 per share in Q3 last year.
Chief Executive Swamy Kotagiri said the company’s Q3 sales were negatively impacted by global vehicle production slowdowns in North America and Europe. Global vehicle production was down four percent during Q3 2024, he added.
“We are responding to the volatile operating environment and are focused on margin expansion, free cash flow generation and increasing return of capital,” said Kotagiri during a call with analysts on Nov. 1.
Kotagiri also emphasized that Magna’s product lines of software and sensors support the development of EVs and autonomous vehicles, something that he stressed will help the company as future growth opportunities are strong.
As of noon ET on Monday, shares of Magna traded at CAD$58.73 per share on the TSE, down 25.55 percent year to date.
Ford is falling
Last Monday, automaker Ford said it would hit the lower end of its 2024 earnings forecast after slightly beating Wall Street’s expectations for Q3.
Adjusted EBIT is expected to be about US$10 million, according to Ford. The OEM had previously issued full-year guidance between US$10 billion and US$12 billion. Ford’s adjusted free cash flow of US$7.5 billion to US$8.5 billion was retained.
Analysts are concerned that softening vehicle demand and rising inventory levels will thwart Ford’s plan to achieve US$2 billion in cost cuts this year, which the OEM announced earlier in 2024.
Ford CFO and Vice Chair John Lawler insists Ford has achieved its US$2 billion in material, freight and manufacturing costs, though higher inflation and warranty fees have affected those improvements and “restricted the company from having a record year.”
As of noon Monday, Ford shares traded at US$10.40 per share on the NYSE, down 14.51 percent year to date.
