- Expect continued sales growth – over $43
billion in total sales by 2019
- Strong free cash flow generation anticipated over next three
years
AURORA, ON, Jan. 11, 2017 /CNW/ - Magna International Inc.
(TSX: MG; NYSE: MGA) today announced its financial outlook for
2017, along with sales expectations for 2019. In this outlook
we have assumed no material unannounced acquisitions or
divestitures. In addition, we have assumed that foreign
exchange rates for the most common currencies in which we conduct
business relative to our U.S. dollar reporting currency will
approximate year end 2016 rates.
OUTLOOK
|
2017
|
|
2019
|
Light Vehicle
Production (Units)
|
|
|
|
|
North
America
|
17.7
million
|
|
18.4
million
|
|
Europe
|
21.7
million
|
|
22.5
million
|
|
|
|
|
Production
Sales
|
|
|
|
|
North
America
|
$19.2 - $19.8
billion
|
|
$20.4 - $21.2
billion
|
|
Europe
|
$8.7 - $9.1
billion
|
|
$10.1 - $10.7
billion
|
|
Asia
|
$2.2 - $2.4
billion
|
|
$3.2 - $3.5
billion
|
|
Rest of
World
|
$0.3 - $0.4
billion
|
|
$0.4 - $0.6
billion
|
|
Total Production
Sales
|
$30.4 - $31.7
billion
|
|
$34.1 - $36.0
billion
|
|
|
|
|
Complete Vehicle
Assembly Sales
|
$2.7 - $3.0
billion
|
|
$6.6 - $7.1
billion
|
|
|
|
|
Total
Sales
|
$36.0 - $37.7
billion
|
|
$43.5 - $46.2
billion
|
|
|
|
|
EBIT
Margin(1)
|
Approximately
8%
|
|
|
|
|
|
|
Interest
Expense
|
Approximately $90
million
|
|
|
|
|
|
|
Tax Rate
|
25% -
26%
|
|
|
|
|
|
|
Capital
Spending
|
Approximately $2
billion
|
|
|
|
|
|
|
(1)
|
Earnings Before
Interest and Taxes ("EBIT") represents Net Income before income
taxes and interest expense, net. EBIT
Margin is the ratio of EBIT to Total
Sales.
|
"Magna has a long history of above-market sales growth, and
2016 was no exception. As we look forward over the next three
years, we expect our sales to continue to outpace industry
production.
Longer term, we believe our capabilities and new innovations,
together with our deep customer relationships, will position us for
continued growth as a preferred supplier for the 'Car of the
Future'."
- Don Walker,
Magna's Chief Executive Officer
"We have made good progress in improving our margins over the
last number of years. We believe there is potential for further
margin progress by 2019, across each of our reporting
segments. We expect to translate our sales growth,
margins and solid returns into strong free cash flow generation
over the next three years."
-
Vince Galifi, Magna's Chief
Financial Officer
We will be making a presentation at the Deutsche Bank Global
Auto Industry Conference on Wednesday,
January 11, 2017 at 1:20 p.m.
EST during which we will review the details of our Outlook.
The presentation will be webcast and available on our website at
www.magna.com. The slides accompanying the presentation will
be available on our website Wednesday morning by 7:00 a.m. EST.
TAGS
2017 Outlook, sales growth, cash flow generation, EBIT margin %
ABOUT MAGNA1
We are a leading global automotive
supplier with 312 manufacturing operations and 98 product
development, engineering and sales centres in 29 countries. We have
over 155,000 employees focused on delivering superior value to our
customers through innovative products and processes, and World
Class Manufacturing. We have complete vehicle engineering and
contract manufacturing expertise, as well as product capabilities
which include body, chassis, exterior, seating, powertrain,
electronic, active driver assistance, vision, closure and roof
systems. Our common shares trade on the Toronto Stock Exchange (MG)
and the New York Stock Exchange (MGA). For further information
about Magna, visit our website at www.magna.com.
FORWARD-LOOKING STATEMENTS
This press release contains statements that constitute
forward-looking statements or forward-looking information within
the meaning of applicable securities legislation, including, but
not limited to, statements relating to: Magna's forecasts of light
vehicle production in North
America and Europe;
expected consolidated sales, based on such light vehicle production
volumes; production sales, including expected split by segment, in
its North America, Europe, Asia
and Rest of World segments; complete vehicle assembly sales;
consolidated EBIT margin, net interest expense; effective income
tax rate; fixed asset expenditures; sales and margin growth; as
well as free cash flow generation. The forward-looking
information in this document is presented for the purpose of
providing information about management's current expectations and
plans and such information may not be appropriate for other
purposes. Forward-looking statements may include financial and
other projections, as well as statements regarding our future
plans, objectives or economic performance, or the assumptions
underlying any of the foregoing, and other statements that are not
recitations of historical fact. We use words such as may,
would, could, should, will, likely, expect, anticipate, believe,
intend, plan, forecast, outlook, project, estimate and
similar expressions suggesting future outcomes or events to
identify forward-looking statements. Any such forward-looking
statements are based on information currently available to us, and
are based on assumptions and analyses made by us in light of our
experience and our perception of historical trends, current
conditions and expected future developments, as well as other
factors we believe are appropriate in the circumstances. However,
whether actual results and developments will conform with our
expectations and predictions is subject to a number of risks,
assumptions and uncertainties, many of which are beyond our
control, and the effects of which can be difficult to predict,
including, without limitation: the potential for a deterioration of
economic conditions or an extended period of economic uncertainty;
a decline in consumer confidence, which would be expected to result
in lower production volume levels; economic or political
uncertainty, including as a result of the U.K.'s potential exit
from the European Union; legal claims and/or regulatory actions
against us, including without limitation any proceedings that may
arise out of our global review focused on anti-trust risk;
underperformance of one or more of our operating divisions; ongoing
pricing pressures, including our ability to offset price
concessions demanded by our customers; our ability to successfully
launch material new or takeover business; restructuring, downsizing
and/or other significant non-recurring costs; our ability to
successfully identify, complete and integrate acquisitions or
achieve anticipated synergies; our ability to conduct appropriate
due diligence on acquisition targets; an increase in our risk
profile as a result of completed acquisitions; shifts in
market share away from our top customers; shifts in market shares
among vehicles or vehicle segments, or shifts away from vehicles on
which we have significant content; inability to sustain or grow our
business; risks of conducting business in foreign markets,
including China, India, Eastern
Europe, Brazil and other
non-traditional markets for us; fluctuations in relative currency
values; a prolonged disruption in the supply of components to us
from our suppliers; work stoppages and labour relations disputes;
scheduled shutdowns of our customers' production facilities
(typically in the third and fourth quarters of each calendar year);
our ability to successfully compete with other automotive
suppliers; a reduction in outsourcing by our customers or the loss
of a material production or assembly program; the termination or
non-renewal by our customers of any material production purchase
order; our ability to consistently develop innovative products or
processes; exposure to, and ability to offset, volatile commodities
prices; warranty and recall costs; restructuring actions by OEMs,
including plant closures; shutdown of our or our customers' or
sub-suppliers' production facilities due to a labour disruption;
risk of production disruptions due to natural disasters or
catastrophic event; the security and reliability of our information
technology systems; pension liabilities; changes in our mix of
earnings between jurisdictions with lower tax rates and those with
higher tax rates, as well as our ability to fully benefit tax
losses; impairment charges related to goodwill, long-lived assets
and deferred tax assets; other potential tax exposures; changes in
credit ratings assigned to us; changes in laws and governmental
regulations; costs associated with compliance with environmental
laws and regulations; liquidity risks; inability to achieve future
investment returns that equal or exceed past returns; the
unpredictability of, and fluctuation in, the trading price of our
Common Shares; and other factors set out in our Annual Information
Form filed with securities commissions in Canada and our annual report on Form 40-F
filed with the United States Securities and Exchange Commission,
and subsequent filings. In evaluating forward-looking statements or
forward-looking information, we caution readers not to place undue
reliance on any forward-looking statements or forward-looking
information, and readers should specifically consider the various
factors which could cause actual events or results to differ
materially from those indicated by such forward-looking statements
or forward-looking information. Unless otherwise required by
applicable securities laws, we do not intend, nor do we undertake
any obligation, to update or revise any forward-looking statements
or forward-looking information to reflect subsequent information,
events, results or circumstances or otherwise.
__________________________
1 Manufacturing operations, product development, engineering
and sales centres and employee figures include certain
equity-accounted operations.
SOURCE Magna International Inc.