Magna International Adjusts Forecast: Challenges in the Automotive Industry Persist

The Canadian automotive supplier Magna International has revised its annual forecasts for revenue and profit downwards. This decision reflects the currently subdued demand in the automotive industry that the company is facing. Although Magna benefited in the past from a stable order flow as car manufacturers ramped up their production, the pace of growth has slowed. This is due to companies aligning their inventories with actual demand. Magna manufactures both individual parts and complete vehicles for renowned automotive manufacturers such as BMW, Mazda, and Ferrari at its production facilities. Recently, industry experts from J.D. Power and GlobalData reduced their forecasts for global light vehicle sales in 2024 by 500,000 units to 88 million units. The supplier Aptiv also took additional measures to enhance profitability after cutting its own sales forecasts. Competitor BorgWarner had to lower its expectations as well. Magna now anticipates annual revenue between $42.2 billion and $43.2 billion, an adjustment from the previous range of $42.5 billion to $44.1 billion. The adjusted annual profit is now expected to be between $1.45 billion and $1.55 billion, down from the previous forecast of $1.5 billion to $1.7 billion. In the third quarter, Magna earned $1.28 per share on an adjusted basis, missing analysts' estimates of $1.40, based on data from LSEG. Revenue amounted to $10.28 billion, also below the expected $10.35 billion.