(Adds details from conference call, shares)
By Nathan Gomes
May 3 (Reuters) – Canada’s Magna International missed first-quarter profit estimates and cut its full-year overall sales forecast on Friday, as auto parts suppliers navigate ongoing supply constraints and bumpy demand for electric vehicles.
The company’s shares were down about 4% in early trade.
Auto parts suppliers have been struggling with lower-than-expected demand for their EV components, as carmakers shift their focus toward producing affordable hybrid vehicles instead.
Supply chain constraints, coupled with labor shortages which began during the pandemic, also continue to impact the auto industry as they try to ramp up production.
Magna executives said on a post-earnings call the company was assessing impacts from automakers’ shifting electrification plans, particularly in North America.
The Aurora, Ontario-based company also recorded asset impairments and restructuring costs of $316 million related to troubled EV startup Fisker.
Magna, which produces powertrains, along with assembling complete vehicles, signed agreements with Fisker in 2020 to engineer and manufacture its Ocean SUV.
Fisker has been grappling with uncertainties after talks with a large automaker for a potential investment collapsed in March.
“Magna’s complete vehicles contract manufacturing business has gone from acting as a growth driver to a drag on margins, much of which is due to Fisker as it is now flirting with possible bankruptcy,” said CFRA analyst Garrett Nelson.
Magna said production of Fisker’s Ocean SUVs had been idled at its plants and it wrote off all assets related to the EV company.
Peer Aptiv also cut its annual sales forecast on Thursday and said it would reduce equity interest in its self-driving joint venture, Motional, with Hyundai Motor .
Magna said it expects full-year 2024 sales of $42.6 billion to $44.2 billion, versus its prior range of $43.8 billion to $45.4 billion.
On an adjusted basis, it earned $1.08 per share in the first quarter, compared with LSEG estimates of $1.24 per share. (Reporting by Nathan Gomes in Bengaluru; Editing by Shilpi Majumdar)