Along with lower sales, Kotagiri said unpredictable production schedules at automakers caused labour and other operational inefficiencies at Magna’s production plants, leading to tighter margins during Q3.
“On top of these factors, we have experienced inflationary cost increases in production inputs, including freight, commodities, and to a lesser degree, labour and energy costs.”
Magna has also built ongoing industry uncertainty into its outlook for the rest of 2021. In an updated forecast released last month, it warned its sales for the year were likely to fall short of guidance, coming in between $35.4 and $36.4 billion, compared to between $38 and $39.5 billion previously.
“The ongoing global semiconductor chip shortage remains the most significant headwind to global industry production,” Kotagiri said. “There have been some signs of improvement recently, however, it remains to be seen when the industry will return to a more stable rate of production.”
Kotagiri also addressed Magna’s recent aborted acquisition of tech supplier Veoneer on the conference call with analysts. Qualcomm Inc. and SSW Partners outbid Magna for the Stockholm-headquartered company last month.