TORonTO — Auto parts maker Magna International Inc. said it was in no rush to pursue new acquisitions as it turned in strong third-quarter results Wednesday.
I wouldnt say theres a whole lot of things out there were aggressively pursuing, but we are looking at a number of different opportunities out there, with a particular focus on technology, Magna CEO Don Walker said in a call with analysts Wednesday.
Right now were seeing some pretty good results and were not in need of any cash, so were not in any panic to do anything.
Walkers comment came as the Aurora, Ont.-based company reported that revenue for the three-month period was up 13 per cent from last year, rising to US$8.3 billion from $7.4 billion — about $100 million above analyst estimates.
The company also increased its sales outlook for the year to $33.9 to $34.8 billion from $33.3 to $34.7 billion, and said cash from operations was $574 million for the quarter before changes in non-cash operating assets and liabilities.
Magna has focused on acquisitions over the last several quarters, especially in Europe and Asia, but Walker said that recent plant openings in China, Serbia, Turkey and Mexico show the company has expanded its footprint to less traditional markets.
In the absence of interesting acquisitions, the company would focus on buying back stock and improving its South American business, which is currently running at a loss.
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We have a number of issues in South America, some of them are product launches, but most of the issues we have down in South America are related to commercial recovery, inflationary issues in Argentina, also in Brazil, Walker said.
Those operations were partly responsible for dragging earnings from Magnas international businesses excluding Europe down to $2 million from $5 million a year ago, despite profits from the Asia Pacific business.
In terms of the overall earnings, both North America and Europe contributed to Magnas higher revenue for the quarter, with North American light vehicle production up four per cent to 3.8 million units and European light vehicle production increasing one per cent to 4.4 million units.
The North America segment had adjusted earnings of $365 million for the third quarter, while Europe generated earnings of $72 million, up from $13 million in the quarter last year, despite continued weak levels of vehicle production in that continent.
As expected, Magnas net income was down from last year, dropping to US$319 million or $1.39 per diluted share, compared to US$390 million or $1.66 per share in the quarter last year.
The earnings were still 14 cents better than analyst estimates compiled by Thomson Reuters.
The beat was significant versus our forecast, but the 2013 guidance looks only slightly stronger than our forecast, Canaccord Genuity analyst David Tyerman said in a note to clients.
Magna should benefit from modest sales growth and margin expansion in Europe and emerging markets.
The third quarter also included $33 million of restructuring charges that Magna said cut 14 cents per share from net income. Adding that back in, Magna would have earned 53 cents per share _ 20 cents per share above the estimate for adjusted earnings.
Magnas board of directors also approved a normal course issuer bid to purchase up to 12 million of its common shares, or 5.4 per cent of its public float.
Magna has more than 300 manufacturing operations and 87 product development, engineering and sales centres in 29 countries.
On the Toronto Stock Exchange Wednesday, Magna shares were trading at $90.00, up $1.02.
