Magna raises 2023 profit forecast, flags impact from UAW strikes

By Nathan Gomes

(Reuters) - Canadian auto parts supplier Magna International raised its 2023 profit forecast on Friday, but flagged an impact from the United Auto Workers (UAW) union strike in North America.

Magna's U.S.-listed shares jumped about 14% in morning trade, after the company also beat third-quarter expectations.

Suppliers had benefited from an uptick in demand for their auto parts, software and tech as vehicle makers around the globe rush to push out safer vehicles with advanced driver-aid systems and higher efficiencies.

CFRA analyst Garrett Nelson, however, said he sees "ample headwinds" for auto suppliers as they head into 2024.

Analysts expect auto parts makers to feel the heat after the UAW's near six-week long strike shut operations at the Detroit Three automakers — General Motors, Ford Motor and Stellantis NV.

Magna, with an exposure of 13%-15% to GM, Ford and Chrysler-parent Stellantis, said its outlook reflected an impact from the UAW strikes at certain customers and full-year sales were expected to be down by $310 million.

The company expects full-year total sales to be between $42.1 billion and $43.1 billion, compared with its prior forecast range of $41.9 billion to $43.5 billion.

Peer Aptiv also on Thursday warned of a $180 million hit to its full-year sales from the UAW strikes.

Additionally, GM and Ford have scaled back their investment plans on electric vehicles.

Magna expects full-year adjusted profit to be between $1.55 billion and $1.65 billion, compared with $1.4 billion to $1.6 billion forecast earlier.

It raised its forecast assumption for light vehicle production in Europe and China but retained prior assumption for North America.

On an adjusted basis, Magna earned $1.46 per share for the third quarter, compared with LSEG estimates of $1.33 per share.

Quarterly sales were at $10.69 billion, compared with analysts' average estimate of $10.37 billion.

(Reporting by Nathan Gomes in Bengaluru; Editing by Shilpi Majumdar)

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Morning Bid: Could consumers keep the Fed on hold, while Japan hikes?
• From coffee to hotpot, brands race to grab a bite of China's growing burger market
• Myanmar confirms nearly 309,000 Rohingya in Bangladesh, says security issues delaying repatriation