According to the US Automotive News, due to the suspension of cooperation with Fisker, the auto parts supplier Magna’s sales and earnings will be lower than expected.
However, the company said it had a plan to stabilise profit margins.
In the first quarter of this year, Magna’s revenue was nearly $11 billion, up 3% from a year earlier.
net income fell to $9 million from $209 million in the same period last year.
adjusted earnings rose 4.
5% to $469 million.
For now, a number of suppliers are grappling with falling sales in Europe and uncertainty about the future of the North American electric car market.
Magna CEO Swamy Kotagiri told investment analysts on the earnings call, “as you can see, the trading volume and the outlook are very volatile.
” In March, Fisker announced that it would stop production and warned that it might be on the verge of bankruptcy.
Kotagiri said on May 3rd that it had signed a contract with Fisker to make Ocean electric cars for the latter, but would not continue to produce them, thus reducing revenue by $400m this year.
For the whole of 2024, Magna lowered its annual revenue forecast to between $42.
6 billion and $44.
2 billion.
Despite falling sales and profit expectations, Magna maintained an EBIT margin forecast of 5.
4% to 6.4%. Executives at the company say they intend to achieve this by cutting expenses and improving operational efficiency.
The company is considering ways to lay off staff and restructure its business.
Kotagiri revealed, “in the past year or so, we have discussed the restructuring of some departments.
” Magna, as for Fisker, executives said they were watching the situation closely and “will assess opportunities to further weaken the impact”.
Kotagiri noted that Magna will continue to pay close attention to contract details and warranties, especially contracts with new car manufacturers, “terms and conditions.
” It’s very important.
Magna is still in business negotiations with traditional carmaker customers, but the negotiations are becoming more and more complex because of the volatility of the supply chain and production.
“in some cases, we actually have commercial returns,” Kotagiri said.
Some OEMs actually provide funds in advance, which reduces the risk.
” Kotagiri says that while suppliers have no control over how customers assemble their cars, they can use process knowledge and planning to predict actual production rather than citing other people’s data.
On concerns about the North American electric car market, Magna Chief Financial Officer Pat McCann said, “there is a lot of noise about the electric car market in the media, especially in North America.
” Electric vehicles are coming, the key is to choose the right platform and customers.
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