Feb 10 (Reuters) – Magna International Inc (MG.TO) on Friday reported a nearly 80% slump in its quarterly profit that missed estimates, as the Canadian auto parts maker struggled with higher engineering costs in its electrification and self-driving businesses.
The company’s fall in profit comes amid ongoing chip shortages and rising raw materials costs that have battered big auto parts and technology suppliers during 2022.
This also comes at a time when auto suppliers are vying to meet the requirements of automakers shifting to electric vehicles, with Magna in December agreeing to buy Veoneer Active Safety for $1.53 billion to bolster its portfolio of self-driving technology.
Magna said on Friday “operating inefficiencies” at a facility in Europe were a drag on its fourth-quarter results. Auto suppliers struggled last year due to a volatile schedule at the continent’s automakers, in part due to an energy crisis.
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Magna, which makes parts such as body structures, chassis and powertrain for automakers including Ford Motor (F.N) and Volkswagen (VOWG_p.DE), warned last month its profits would not meet its earlier expectations because of a number of issues including higher-than-expected warranty costs, lower sales and provisions for bills that customers might not pay.
The Aurora, Ontario-based company reported adjusted net income of 91 cents per share, missing analysts’ expectations of $1.06, according to Refinitiv.
Revenue increased 5% to $9.57 billion for the quarter, compared with analysts’ expectations of $9.51 billion.
Reporting by Kannaki Deka in Bengaluru; Editing by Sherry Jacob-Phillips and Maju Samuel
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