Magna Q2 Sales and Profit Exceed Expectations, Raises Full-Year Outlook

On August 1, Canadian auto parts supplier Magna International announced that its total sales in the second quarter of this year decreased by about 3% year-on-year to $10.631 billion, but still exceeded the expected $10.23 billion. This was mainly due to a decline in light vehicle production in North America and Europe, as well as the discontinuation of certain projects (including the complete vehicle assembly business for the Jaguar I-Pace and E-Pace). However, these impacts were partially offset by the launch of new programs and the net appreciation of foreign currencies against the US dollar.

Image source: Magna

In the second quarter of this year, although Magna's total sales declined, its earnings before tax increased by 16% year-over-year to $496 million; its adjusted earnings before interest and taxes rose slightly by 1% year-over-year to $583 million. This was mainly due to the company's ongoing improvements in productivity and efficiency (including benefits from prior operational initiatives and restructuring activities) and an increase in equity income. However, this growth was partially offset by the net tariff costs not yet recovered from customers.

Meanwhile, Magna noted that in the second quarter of this year, its adjusted earnings before interest and taxes (EBIT) margin increased by 20 basis points year-on-year to 5.5%; diluted earnings per share rose from $1.09 in the same period last year to $1.35, and adjusted diluted earnings per share grew by 7% year-on-year to $1.44, exceeding analysts' expectations compiled by the London Stock Exchange Group (LSEG) of $1.14. This was mainly due to the growth in adjusted EBIT, a reduction in the effective tax rate, and a 2% average reduction in the number of diluted outstanding shares due to stock repurchases after the second quarter of 2024. Cash flow from operating activities decreased by $109 million year-on-year to $627 million.

It is worth noting that in the second quarter of this year, global light vehicle production increased slightly by 1% year-on-year to 22,464,000 units. However, production in Magna's two largest markets, North America and Europe, declined by 6% and 2% year-on-year, respectively, while a 5% year-on-year increase in the Chinese market offset these declines.

Magna has raised its full-year 2025 sales forecast, based on its better-than-expected financial performance in the second quarter of this year and the cost-cutting measures it has implemented. Magna now expects its 2025 sales to be between "$40.4 billion and $42 billion," up from its previous forecast of "$40 billion to $41.6 billion."

In May of this year, Magna stated that it would undertake restructuring, reduce capital expenditures and engineering expenses to alleviate the impact of comprehensive tariffs. The tariffs imposed by U.S. President Trump have put pressure on automotive companies throughout the supply chain, forcing auto parts suppliers to bear more costs or renegotiate with automakers.

In addition, due to market demandStrong growth in demand for automotive partsAutomotive parts suppliers Aptiv and BorgWarner also raised their full-year financial forecasts for 2025 on July 31.