Auto parts supplier Magna rides demand rebound to forecast upbeat 2021

Canadian auto parts maker Magna International Inc on Friday forecast full-year revenue above analysts' estimates after fourth-quarter profit surged 67% on a rebound in vehicle sales from pandemic lows.

Pent-up demand and customers preferring to buy vehicles seeking more safety during the health crisis have lifted auto sales and boosted demand for auto suppliers.

The Ontario-based company expects 2021 revenue of $40 billion to $41.6 billion, above analysts' average estimate of $38.41 billion, according to Refinitiv I/B/E/S data.

Magna's upbeat forecast comes as an automotive chip shortage is forcing carmakers to trim production, with US parts maker Visteon Corp projecting the crunch could hit global auto production by about 10% to 15% in the first half of 2021.

Ontario-based Magna estimated 2021 North American light vehicle production of 15.9 million units. In Europe, it expects full-year production to be 18.5 million units and 24 million units in China.

In the fourth quarter, light-vehicle production was up 3% in North America and Europe.

Net income attributable to Magna rose to $738 million from $440 million a year earlier, while adjusted earnings per share of $2.83 beat estimates of $2.02.

Revenue rose 12.4% to $10.57 billion, also beating estimates of $10.02 billion.

The company raised its quarterly cash dividend by 8% to 43 cents per share.