TORONTO (Reuters) -- Magna International Inc. reported a higher than expected rise in second-quarter profit on Wednesday and raised its earnings guidance for the full year.
The Aurora, Ontario-based firm, which counts big carmakers like General Motors and Ford Motor Co. as major customers, said the results were driven by an 18 percent jump in sales.
Magna said that while overall auto sales were flat to weaker in the quarter, manufacturers used more of its parts in vehicles than a year earlier.
"We enjoyed an excellent quarter in business awards from our customers. In addition, we're currently quoting on a significant amount of new business across all groups. This high level of sourcing activity, bodes well for continued content growth," Magna chief executive Belinda Stronach told analysts on a conference call.
The company said net income rose to $174 million, or $1.76 a share, in the quarter ended June 30, from $159 million, or $1.63 a share, a year earlier. Sales rose to $3.85 billion from $3.27 billion.
Fifteen analysts surveyed by Reuters Research, a unit of Reuters Group Plc, had expected, on average, earnings of $1.70 a share.
2003 FORECASTS RAISED
Magna said North American vehicle production fell about 9 percent during the second quarter and European vehicle production was flat. But it said its content per vehicle rose 31 percent in Europe and 23 percent in North America.
For the full year, Magna raised its automotive sales forecast to a range of $14 billion to $14.8 billion from $13.4 billion to $14.3 billion. It raised its forecast of diluted earnings per share to $6.20 to $6.55 from $6 to $6.40.
The company said it expects full year average dollar content per vehicle to range between $500 and $520 in North America and $300 and $320 in Europe.
It forecasts 2003 production volumes of about 15.9 million units in North America, up from its previous estimate of 15.8 million, and 16 million units in Europe, down from its earlier forecast of 16.1 million.
"Relatively strong June and July auto sales in North America, have relieved some of the inventory level concerns that existed at the end of last quarter. We are holding our production outlook unchanged in North America for the second half," Stronach told analysts.
"Second-quarter production came in approximately 100,000 units above our assumption. Thus, we were revising our assumption for north American production to 15.9 million units."
The company said it expects third-quarter automotive sales of between $3.4 billion and $3.6 billion and diluted earnings per share from operations in a range of $1.05 to $1.25. Analysts surveyed by Reuters Research had forecast earnings per share of $1.22.
Magna expects average dollar content per vehicle to range between $510 and $525 in North America and between $330 and $345 in Europe in the third quarter. It forecast third-quarter vehicle volumes will be about 3.7 million units in both North America and Europe.