A Member of Pat McKeough’s Inner Circle recently asked for his advice on a leading global automotive supplier that designs, engineers, and manufactures systems, modules, and components for original equipment manufacturers worldwide.
Pat notes that Magna will likely continue to suffer from soft demand for EVs and that it operates in a rapidly changing industry. That said, the company certainly possesses strengths that continue to serve it well.
Magna International Inc. (Symbol MG on Toronto; www.magna.com) is one of the world’s largest auto suppliers.
As a Tier 1 supplier, the company is a direct supplier to original equipment manufacturers, or OEMs. Its top six customers are General Motors, Merecedes-Benz, BMW, Ford, Stellantis and Volkswagen.
Magna has 342 manufacturing and assembly plants and 103 development and sales centres in 28 countries. The company has 138 plants in North America, 104 in Europe, and 88 in Asia.
Magna’s expertise touches nearly every part of the vehicle. Its product skills include body, chassis, exterior, seating, powertrain, electronics, software, mirrors, lighting and roof systems.
The company operates through four segments: Body Exteriors & Structures, Power & Vision, Seating Systems, and Complete Vehicles.
Body Exteriors & Structures include body and chassis systems, and exterior systems.
Power & Vision includes powertrains, electronics, mechatronics, mirrors and lighting, and roof systems.
Seating Systems makes complete seating systems, devices, foam and trim products.
Complete Vehicles makes complete vehicles for OEMs. For example, this unit makes the Mercedes-Benz G-Class and the Jaguar I-Pace for Tata Motors.
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Magna International: Latest quarter was weaker, but the outlook is positive
In the three months ended March 31, 2025, Magna’s revenue fell 8.2%, to $10.07 billion from $10.97 billion. The lower sales largely reflected a 3% decrease in global light vehicle production, including 8% and 5% lower production in Europe and North America, respectively, partially offset by 2% higher production in China. In addition, sales were hurt by lower complete vehicle assembly volumes, including as a result of the end of production of the Jaguar I-Pace and E-Pace, the end of production of certain programs and the net weakening of foreign currencies against the U.S. dollar. These were partially offset by the launch of new programs.
Excluding one-time items, Magna earned $0.78 a share, in the latest quarter. That was down 11.8% from $1.08.
The stock yields 5.0%.
Magna will likely continue to suffer from soft demand for EVs—many OEMs have cancelled or delayed future EV programs—and the end of some manufacturing programs this year. What’s more, the company operates in a rapidly changing industry that will challenge its ability to innovate in the years to come.
That said, the company certainly possesses strengths that will serve it well. For instance, it offers a wider range of capabilities than its peers. This lets it invest more efficiently and bring its products to market faster. It can also use its broad skill set to tap into emerging trends. This is especially true with EVs, which still have strong long-term potential.
Recommendation in Pat’s Inner Circle: Magna International Inc. is okay to hold.
