Magna International Inc. co-CEO Don Walker, proponent of the supplier giant's acquisition strategy, indicated today that the company may be dialing back its takeover plans this year.
“We don't see as many smaller takeover opportunities as we did last year,” he told analysts and media during the company's fourth-quarter earnings conference call. “The banks may be supporting these smaller suppliers.”
Magna led a group of European investors last fall that sought to acquire General Motors' Opel unit, but GM eventually decided to retain the business.
Acquisitions haven't halted, though. Magna said it has signed a binding agreement to acquire Karmann Japan Co., a maker of convertible tops and a subsidiary of Wilhelm Karmann GmbH of Germany.
Magna CFO Vince Galifi also said during the call that the company is close to the purchase of Karmann's roof operations in Germany and Poland
North America's largest supplier is expected to combine the Karmann operations with its existing car top systems, the former Porsche car-top systems subsidiary that Magna acquired in 2006.Magna's sales and profits fell in 2009 as North American production slid for the seventh consecutive year.
Magna, of Aurora, Ontario posted a fourth quarter sales gain of 12 percent to $5.42 billion.
But sales for the year plunged 27 percent to $17.37 billion.
The company managed to narrow its fourth-quarter operating loss to $125 million, from a loss of $165 million for the same period last year. For the full year, Magna reported an operating loss of $511 million, compared with a profit of $328 million in 2008.
For the entire year, Magna said it posted a net loss of $493 million, or $4.41 a share, compared with net income of $71 million, or 62 cents a share. Magna said it posted revenue of $17.37 billion, down 27 percent from revenue of $23.70 billion in 2008.
Magna said it expects 2010 sales of $19 billion to $20 billion, based on light vehicle production volumes of about 10.5 million units in North America and about 11.4 million units in Europe.
Magna said its 2010 outlook assumes no significant acquisitions or divestitures.
Magna continues to add “takeover business” that it picks up from distressed and other suppliers. During the fourth quarter, the company added nearly $250 million of business. That was on top of the $700 million added during the first nine months of the year. The numbers include North American and European takeover business.
Reuters contributed to this report>