Stock to watch: Magna International Inc. (USA)(NYSE: MGA)

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Magna International Inc. (USA)(NYSE: MGA) managed to deliver a consolidated production sales rise of 3% year-on-year for the fourth quarter of 2017 (excluding the positive impact of currency and acquisitions net of divestitures) which is better than the increase in global production of 2%. This outperformance was mainly on the back of North America, which was down 1% against a 5% decline in production, as well as Europe which rose 13% from a 7% rise in production. But Asia was down 4% against a 1% rise in production hurt by a difficult comparison with last year’s fourth quarter.

The group reported a record consolidated sales of $10.4 billion, a consolidated EBIT of $809 million, which is up 16% against 2016. The fourth quarter net income rose 13% yoy to $568 million, while adjusted EPS reached $1.57, an all-time record for us, up 20%. MGA also generated free cash flow after capital and another asset spending of $585 million and returned $461 million to shareholders through share repurchases and dividends. As a result, the stock rose over 2.3% on Feb 22nd, 2018 (as of 12:35PM EST; Source: Google finance)

EBIT margin percent rose to 7.8% during the fourth quarter of 2017 as compared to 7.5% in Q4 2016. EBIT rose 16% to $809 million. Equity income rose $42 million or 91% yoy to $88 million in the fourth quarter of 2017, driven by better sales due to the launch of new programs at GETRAG in Asia, which was partially offset by launch and related cost at our GETRAG joint venture in Europe. As a result, EBIT margin in Asia rose to 17.5% from 12.9% in Q4 2016.

On the other hand, for the full year 2017, the group outgrew the Asian market and based on their outlook they forecast to continue their strong performance through 2020. Moreover, the unconsolidated sales in Asia rose 88% to $672 million in the quarter excluding acquisitions.

Meanwhile, in China, the group intends to leverage the demand of new energy vehicles opportunities to supply traditional players as well as startups. As a recent example, Chinese startup NIO launched their ES8 electric SUV in December last year.

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