TORONTO - Magna International Inc. (TSX:MG) has raised its sales guidance for 2011 after a 43 per cent jump in first-quarter profits fuelled the auto parts giant's confidence in a continuing recovery in the auto industry.
"We had a record quarter in total sales and net income," Magna CEO Donald Walker said during a conference call with analysts Wednesday after the company released quarterly results at its annual general meeting in Markham, Ont..
"Every sales line in our statement increased year-over-year, aided by higher volumes in a number of markets -- in particular our traditional markets of North America and western Europe," Walker said.
The Aurora, Ont.,-based company -- which reports in U.S. dollars -- earned US$322 million, or $1.30 per share in the first quarter of 2011, up from $224 million or 99 cents per share in the comparable period a year ago.
Its results topped analyst estimates of $1.16 per share, according to Thomson Reuters.
The company also raised its 2011 outlook and now anticipates total sales of between US$27.1 billion and $28.5 billion, up from an earlier projection of between US$24.8 billion and $26.3 billion.
The quarterly results included a $9-million writedown on a real estate asset, while the 2010 results included a $14-million gain from the sale of one of its plants.
Revenue increased 34 per cent to $7.2 billion from $5.4 billion in the year-ago period.
The annual general meeting marked a milestone in the company's history.
Frank Stronach, the tool and die maker who went on to build the multibillion-dollar international auto parts empire, officially stepped down as Magna chairman. It was his latest move to disengage from the auto parts company he founded.
Magna eliminated its former dual-class voting share structure that gave the Stronach family voting control of the company in a $1-billion deal with Stronach last year.
He was re-elected as a director and will be given the title of founder and honorary chairman.
Another high profile director, Mike Harris, was also re-elected, despite the advice of two proxy advisory firms who suggested shareholders oust the former Ontario premier over his handling of the controversial deal to buy out Stronach.
Stronach still owns or controls about 10.6 million Magna shares and 2.7 million options. Magna has about 242 million shares outstanding.
He made it clear at the meeting that he won't be sitting back and enjoying his fortune. Instead Stronach will focus on a private electric car joint venture with Magna that he gained control of in last year's deal.
"Now I have a reasonable amount of money, I have thousands of ideas and most of all I won't be constrained -- at a public company you're constrained (as to) what you can do," Stronach, 78, told shareholders at the meeting.
Despite Stronach's departure, the auto parts maker appears headed for a strong year. The world's biggest automakers have been reporting a surge in post-recession consumer demand, with Ford Canada reporting its best April in more than a decade.
In the first quarter of this year, Magna's total vehicle assembly sales grew 51 per cent to US$674 million, compared with $446 million for the first quarter of 2010.
Vehicle production grew 17 per cent in North America and 10 per cent in western Europe compared with the first quarter of 2010.
Magna's sales in the rest of the world increased 69 per cent, its biggest driver of growth as the company diversifies away from its two main markets.
Walker said the company plans to start up 23 new plants over the next two years, with a majority of them focused in Asia and South America, where auto sales are growing quickly with emergence of a large middle class.
"We are investing in these startups to continue to strengthen our global footprint," Walker said, adding that they will be a drag on earnings in the short term.
Magna shares have been rising steadily over the opening months of 2011 as the outlook for the global auto industry improved. They gained 82 cents, or 1.69 per cent, to C$49.28 Wednesday on the Toronto Stock Exchange.
Magna said the earthquake and tsunami in Japan will continue to disrupt global vehicle production throughout the year. While it has two plants in that country, it said the impact of the disruptions has not had a material impact on its results nor does is expect it to in the future.
Magna has more than 96,000 employees at 256 plants and 82 product development, engineering and sales centres around the world.
