Canadian Tier 1 auto supplier Magna International Inc. announced it has lowered expectations for the second half of 2018 amid uncertainty surrounding tariffs and trade negotiations involving the United States and other countries including Canada and China.
After posting a net income of US$ 626 million on record sales of US$ 10.28 billion for the second quarter, CEO Don Walker told analysts that Magna is cutting down its estimates for sales, margins and other key metrics for 2018, even though its second-quarter results were strong.
“As far as what happens with tariffs long-term, it’s anybody’s best guess,” Walker said. “I would hope that eventually we will get to the point where we have got an agreement on NAFTA — in which case I think everything between Canada, the U.S. and Mexico gets resolved.”
Magna now estimates that its total sales for 2018 will be in a range of US$ 40.3 billion to US$ 42.5 billion, down 1.4% from the previous outlook. Adjusted net income attributable to Magna is now estimated between US$ 2.3 billion and $2.5 billion, down US$ 100 million from both the top end and lower end of the range.
Magna operates 32 production facilities in Mexico. Except for its vehicle engineering and contract manufacturing division, every other business branch of Magna International has presence in the country. Overall the company’s workforce in Mexico currently totals more than 28,000 employees.