- Sales growth and increased EBIT Margin over outlook period
- Higher free cash flow in 2019-2021 period, compared to 2018-2020
Magna International Inc. (TSX: MG; NYSE: MGA) today announced its financial outlook for 2019 and 2021.
Our outlook to 2021 anticipates continued growth in total sales and improvement in our EBIT Margin compared to 2018 despite our expectation of relatively level light vehicle production across our major end markets of North America and Europe during this same outlook period. Free cash flow is expected to increase to a cumulative total of more than $6.5 billion in the 2019-2021 timeframe as compared to over $6 billion in the 2018-2020 period, reflecting an anticipated increase in earnings and relatively level capital spending.
For 2019, our sales are expected to be negatively impacted by the announced disposition of our Fluid Pressure & Controls business, net of acquisitions, and by foreign currency translation, reflecting the stronger U.S. dollar. Excluding these items, our total sales are expected to increase in 2019, compared to 2018. Our North American business reflects the negative impact of the recently announced General Motors assembly plant actions. Our outlook anticipates a slight decline in our EBIT Margin in 2019 reflecting, among other factors, higher commodity costs, increased spending for electrification and autonomy, a decline in equity income, and a higher proportion of lower margin Complete Vehicle sales.
OUTLOOK
| 2019 | 2021 | ||
| Light Vehicle Production (Units) | |||
| North America Europe |
17.0 million 22.3 million |
17.0 million 22.9 million |
|
| Segment Sales | |||
| Body Exteriors & Structures Power & Vision Seating Systems Complete Vehicles |
$16.8 – $17.6 billion $11.2 – $11.8 billion $5.8 – $6.2 billion $6.9 – $7.3 billion |
$17.8 – $18.8 billion $11.8 – $12.6 billion $6.3 – $6.8 billion $7.0 – $7.7 billion |
|
| Total Sales | $40.2 – $42.4 billion | $42.4 – $45.4 billion | |
| EBIT Margin3 | 7.3% – 7.6% | 8.1% – 8.5% | |
| Equity income (included in EBIT) | $195 – $240 million | $290 – $345 million | |
| Interest Expense | Approximately $100 million | ||
| Tax Rate | Approximately 24% | ||
| Net income attributable to Magna | $2.1 – $2.3 billion | ||
| Capital Spending | Approximately $1.7 billion | ||
In this outlook we have assumed no material unannounced acquisitions or divestitures or other significant transactions. The outlook reflects the divestiture of our Fluid Pressure & Controls business, which is expected to occur at the end of the first quarter of 2019. However, the outlook above does not include any estimated gain or loss on the sale. 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 2018 rates.
Certain of the forward-looking financial measures above are provided on a Non-GAAP basis. We do not provide a reconciliation of such forward-looking measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP. To do so would be potentially misleading and not practical given the difficulty of projecting items that are not reflective of on-going operations in any future period. The magnitude of these items, however, may be significant.
We will be making a presentation at the Wolfe Research Global Auto Industry Conference on Tuesday, January 15, 2019 at 3:40 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 Tuesday morning.
Quelle: MAGNA
