Magna Beats Expectations and Ups Sales Outlook

Canadian auto parts producer Magna International announced Tuesday earnings that surpassed forecasts and an increase in its full-year sales outlook. Net income came in at $155 million ($1.38/share) compared to $94 million ($0.86/share) last year. Revenue jumped 12% to $6.1 billion. Both revenue and profit figures beat analysts' estimates of $1.36/share on $5.75 billion in sales. "The beat was not a surprise to us given the company's recent track record," said Richard Kwas, a Wachovia Capital Markets analyst. "Strong sales drove the bulk of the earnings-per-share outperformance." In its sales outlook for 2007, the company increased its expected range to $25 billion-$26.3 billion up from $24.3 billion-$25.6 billion. It also announced a share buyback plan to repurchase as many as 9.5 million shares starting next week. The company will likely see steady revenue growth in the future, as it recently approved a $1.54 billion investment by a Russian firm that should open the door for the company to sell its parts in the growing Russian market(full story). Co-CEO Don Walker said the company is working on a few "promising" projects with OAO AvtoVAZ, Russia's largest carmaker. Shares of Magna climbed 5.3% to $98.24 off the upbeat report.

Sources: Press release, Bloomberg, Reuters
Commentary: UBS Sees Buying Opprtunity In Cash Rich Magna • Goldman Lowers Estimates for GM, Ford; Raises Magna
Stocks to watch: MGA. Competitors: LEA, VC. ETFs: EWC
Earnings call transcript: Magna International Q2 2007

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