Why is Magna International’s (TSX:MG) stock tanking?

Highlights

• Stocks of Magna International (TSX:MG) tanked by over six per cent on Friday, February 11, after it announced its Q4 earnings for FY2021.
• Magna International is said to be one of the biggest automotive suppliers worldwide.
• The company also hiked its quarterly dividend by five per cent to US$ 0.45 apiece (on a cash basis), payable on March 11.

Stocks of Magna International (TSX:MG) tanked by over six per cent on Friday, February 11, after announcing its Q4 earnings for FY2021. Magna International is said to be one of the biggest automotive suppliers worldwide.

The Aurora, Ontario-headquartered automotive company is grappling with the global semiconductor chip shortage, which continued to affect its manufacturing operations and impacted its Q4 figures.

Magna, reportedly, said that some of its customers had to adjust their production schedules due to the Ambassador Bridge blockade led by the trucker protestors. However, on Sunday, February 13, the bridge was cleared after a 5-day protest and “normal border processing” is said to have resumed.

Let us find out how Magna did in Q4 FY2021.

Magna (TSX:MG) Q4 FY2021 results

The C$ 29 billion market cap company said that its light vehicle production was reduced by 17 per cent in Q4 FY2021, which represented a 28 per cent slump in Europe, a 20 per cent decrease in North America, and a 10 per cent decline in China. On the other side, Magna also saw its top-line plunge by 14 per cent year-over-year (YoY) to US$ 9.11 billion in the latest quarter.

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The company earned a net income of US$ 464 million in the fourth quarter of FY2021, down from US$ 738 million a year ago. Magna’s Q4 adjusted EBIT also reduced from US$ 1.1 billion in 2020 to US$ 508 million in 2021.

Magna also said that in Q4 FY2021, it returned US$ 378 million to its shareholders via share buybacks and dividends. The company also hiked its quarterly dividend by five per cent to US$ 0.45 apiece (on a cash basis), payable on March 11.

 Image source: © 2022 Kalkine Media®  

Data source: Magna International Inc

Magna stock performance

Magna’s stock closed at C$ 96.51 apiece on Friday, with 2.1 million shares exchanging hands. It was roughly four per cent up from its 52-week low of C$ 93.25 (September 20, 2021). The automotive stock slipped by approximately two per cent YoY.

Bottom line

Magna managed to secure a “high volume, global award” from a Germany-based automobile manufacturer on February 7 this year to introduce its “industry-first system” solutions to the market with production beginning from 2024.

Magna expects its 2022 light vehicle production to reach 15.2 million units in North America, 18.5 million units in Europe and 24.2 million in China.  The company announced its 2022 outlook with total sales reaching around US$ 38.8 billion to US$ 40.4 billion and a net income range of US$ 1.7 billion to US$ 1.9 billion.

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