Canadian auto and truck parts maker Magna International (NYSE: MGA) reported a better than expected profit on Friday, February 22, but its CEO noted that the Trump administration’s tariffs were hurting the company’s U.S. plants.
Magna generated a $456 million profit in the fourth quarter of 2018, an 18 percent decline compared to $559 million a year earlier, weighed down by large investments in electric and autonomous vehicle research and development and declines in China. Meanwhile, sales grew by 5 percent to a record $10.1 billion, as the company’s completed-vehicles business surged by 39 percent.
The earnings of $1.63 per share were slightly better than the $1.60 expected by analysts. The company also increased its dividend by 11 percent to $0.365 from $0.33
“Despite some headwinds, we are positioned for another good year,” CEO Donald Walker told analysts in a conference call.
Walker expressed frustration at the Trump administration’s tariffs against Canadian and Chinese steel, since Magna operates 58 manufacturing facilities in the United States.
“Tariffs continue to hurt us,” Walker said. “They’re mainly hurting our U.S. plants.”
Magna expects the tariffs will cost it $45 to 50 million in 2019.
He characterized Magna’s results as strong in the face of a global decline in light vehicle production, particularly in China.
The launch of the Jaguar I-Pace, which Magna produces in Graz, Austria, fueled the growth in the Completed Vehicle segment. It will continue to grow outside parts manufacturing with the forthcoming production of the Toyota GR Supra.
Magna’s largest segment, Body Exterior and Structures, declined by 4 percent.