Magna International Inc. reported an 80-per-cent decline in fourth-quarter profits as North America's largest parts supplier struggled with higher costs related to electrification and its advanced driver-assistance business, among others.
The microchip shortage, inflation, higher labor and energy costs, geopolitical uncertainty and lower new-vehicle production have put the squeeze on suppliers' margins, even as automakers largely continue to report healthy profits. Inflation, higher commodity costs and spiking energy prices in Europe are also weighing the company down, he said.Revenue in North America rose to $4.7 billion in the fourth quarter from $4.2 billion a year earlier. Sales were flat in Europe and Asia , while revenue from other regions in the world rose to $123 million from $100 million a year prior.
As Magna transitions its complete vehicle business to electric, next-generation vehicles such as the Fisker Ocean SUV, it expects sales volume to continue declining. The supplier expects sales of between $4.9 billion and $5.2 billion from the business in 2023, and between $4 billion and $4.5 billion in 2025. Increased input costs, high labor and energy costs and costs related to engineering programs are expected to weigh down the unit in 2023, CFO Pat McCann said on the call.
Magna expects new program launches and higher light-vehicle production to boost its business in 2023.
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