Magna’s quarterly report warns about protectionism in North America
Canadian auto supplier Magna International, North America biggest auto parts maker, said the growth of “protectionist sentiments” could hurt its operations and profitability, according to a company statement.
Magna CEO Don Walker, speaking during the company’s fourth-quarter conference call, said any border-adjustment tax would negatively impact the entire industry.
“The automobile industry is a highly-globalized industry which is currently dependent on open borders and the free movement of goods, services, people and capital, particularly in Europe and North America,” said the statement.
Magna, based in Aurora, Ontario, has operations in 29 countries including 30 manufacturing sites and a Research Center in Mexico.
NAFTA renegotiations aimed at the U.S. trade deficit with Mexico could potentially hurt the supplier because its Mexican operations make up 14% of global sales, according to Reuters.
Net income attributable to Magna’s continuing operations dropped to US$ 478 million from US$ 483 million in the fourth quarter. Magna’s total sales rose 8% to US$ 9.25 billion. The company noted that vehicle production increased 2% in both North America and Europe last year.
Magna said the cost of goods sold jumped 7.7% to US$ 7.9 billion in the quarter. For the year, net income from continuing operations grew 4% to US$ 2 billion. The company said it posted record revenue of US$ 36.5 billion, up 13% from 2015.
Magna makes a wide variety of parts for automakers, also assembles cars under contract from motor vehicle manufacturers. Its biggest customers include General Motors, Volkswagen AG, BMW and Ford Motor Co.