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Magna International Q2 Loss at $205 Million

Would be purchaser of Opel hit hard by declines at automakers.

by on Aug.07, 2009

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Total sales are off 45%.

Magna International Inc. (TSX: MG.A; NYSE: MGA) today reported that it lost U.S. $205 million in the second quarter and $467 million in the first half of 2009 as sales to major automaker clients plummeted.

The Canadian-based conglomerate, with 71,000 employees in 247 manufacturing operations and 86 product development and engineering centers in 25 countries, is an excellent barometer of the auto industry.

During the second quarter of 2009, vehicle production declined 49% to 1.8 million units in North America and 28% to 3.1 million units in Europe, each compared to the second quarter of 2008.

Also during the second quarter of 2009, Magna’s North American and European average dollar content per vehicle decreased 10% and 7% respectively, each compared to the second quarter of 2008.

Complete vehicle assembly sales by Magna decreased 60% to $423 million for the second quarter of 2009 compared to $1.1 billion for the second quarter of 2008, while complete vehicle assembly volumes declined 65% to approximately 14,100 units.

As a result of the “significant declines in vehicle production in North America and Europe, lower average dollar content per vehicle in these two markets, and decreases in assembly sales and tooling, engineering and other sales,” Magna’s total sales decreased 45% to $3.7 billion for the second quarter of 2009 as compared to $6.7 billion for the second quarter of 2008. 

Magna International Q2 2009

 

Three Months Ended June 30,

Six Months Ended June 30,

2009 2008 2009 2008
Sales $3,705 $6,713 $7,279 $13,335
Operating (loss) income  $(237) $319 $(467) $605
Net (loss) income $(205) $227 $(405) $434
Diluted (loss) earnings per share $(1.83) $1.98 $(3.62) $3.75
All results are reported in millions of U.S. dollars, except per share

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GM Fighting to Hold its Overseas Empire Intact

Decision on Opel bid delayed.

by on Jul.27, 2009

The sale of Opel has been delayed, but barring a turnaround in the U.S., GM may yet have to sell other parts of its global empire.

The sale of Opel has been delayed, but barring a turnaround in the U.S., GM may yet have to sell other parts of its global empire.

The new General Motors Corp. that has emerged from bankruptcy is fighting to keep its overseas empire intact.

Under pressure to sell off a controlling stake in its German-based Opel subsidiary, GM may yet have to auction off other key global ventures.

GM now doesn’t expect to make a final choice between two competing bids for Opel from Magna and the Belgian-based private-equity firm of RHJI until after the re-organized General Motors board of directors meets early next month. A third bid from Beijing Automotive Holding Inc. has been rejected, GM officials confirmed.

Pulse-pounding performance!

Pulse-pounding performance!

The rejection of the Beijing Automotive bid prompted speculation that GM had turned the Chinese maker down because it didn’t want to contribute to the rise of a rival in the critical Asian automotive market. GM’s various China ventures have been very successful but the automaker’s Chinese partners, which own half the business have become increasingly assertive.

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Is GM’s Deal to Sell Opel Falling Apart?

Was there ever a deal in the first place?

by on Jun.30, 2009

The proposed sale of Opel to the Canadian supplier, Magna, could have hit a roadblock.

The proposed sale of Opel to the Canadian supplier, Magna, could have hit a roadblock.

Talks between General Motors and the Canadian auto parts giant, Magna International, appear to be running into snags, threatening the planned sale of a majority stake in GM’s huge and troubled European subsidiary, Opel.

A number of alternatives bidders are now pushing to displace Magna as the preferred partner in an Opel sale, including the Belgian industrial holding company, RHJ International, and China’s Beijing Automotive Industry Corp.  The Italian automaker, Fiat, is also reportedly looking for ways to revive its own bid, which lost out to the offer from Magna.

The unexpected turns of events comes precisely one month after the Canadian supplier and its Russian ally, Sberbank, appeared to lock down the purchase of a majority stake in Opel, the German-based GM operation that was teetering perilously close to insolvency.  The U.S. automaker was under intense pressure to conclude a deal with one of three final bidders in order to win a $2.5 billion bridge loan from the German government.

But “the initial celebration” was premature, a source close to Opel tells TheDetroitBureau.com.  “What was signed was a Memorandum of Understanding (MOU), not a sales agreement.  And since then, others have come along.”

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Magna and Russians Land Opel

Supplier was favorite of Germans and GM.

by on May.30, 2009

What role Opel will now play in GM's effort to form a truly global empire is uncertain.

What role Opel will now play in GM's effort to form a truly global empire is uncertain.

With weakened U.S. auto giant General Motors now coming down to the wire with an anticipated bankruptcy filing on Monday, the automaker has agreed to sell a majority stake in its ailing European Opel subsidiary to a consortium led by Canadian super-supplier Magna International.

The deal came hours after the other bidder in the battle for Opel, Italian automaker Fiat SpA, decided to boycott a meeting with German government leaders and others involved in the Opel rescue effort.  The government had pressured GM to agree to the sale before it would approve a bridge loan worth $2.1 billion.  The Germans will also provide another $420 million in short-term assistance, announced Finance Minister Peer Steinbrueck, to keep Opel running while the details of the sale are finalized.

When GM first announced it would need assistance to save Opel, it said it would be willing to relinquish a minority stake in the critical subsidiary.  But it later acknowledged it would be willing to become a minority shareholder, and the final deal will give Magna 20% of Opel and GM’s other European assets, while the Russian Sberbank will acquire another 35%, the same share remaining for GM.  Opel employees will control a 10% stake.

Subscribe to TheDetroitBureau.com“Opel has been given prospects for the future,” said German Chancellor Angela Merkel after the deal was completed. “Now the work for Opel and for Magna … really begins.”  Merkel had repeatedly said that the German government was neither interested nor willing to take a stake of its own in Opel – unlike the approach taken by the Obama Administration, which expects to wind up with 70% of the European unit’s parent, General Motors. (more…)

Opel Bailout, Sale, Threatened by Fiat Boycott

Italian maker, one of three bidders, refusing to attend talks.

by on May.29, 2009

Fiat CEO Sergio Marchionne boycotts meeting with senior German leaders over the sale of Opel.

Fiat CEO Sergio Marchionne boycotts meeting with senior German leaders over the sale of Opel.

The increasingly complicated effort to save General Motors’ German-based Opel subsidiary ran into yet another snag, today, when Fiat, one of the two remaining bidders hoping to acquire a controlling chunk of Opel, decided to boycott a bailout meeting, in Berlin.

The Italian maker’s move comes barely a day after German government officials ignored their own deadline and refused to complete work on a $2 billion bridge loan package Opel says it needs if it hopes to continue operating long enough to complete a sale.

The Friday meeting was supposed to bring together representatives from the two bidders, Fiat and Canadian mega-supplier Magna International, as well as GM executives and officials from both the German and U.S. governments.

Subscribe to TheDetroitBureau.comBut a spokesman for German Chancellor Angela Merkel now says such a high-level meeting will only take place if, “those involved … have something substantial to produce, contracts that carry their signatures.”  Without Fiat’s involvement, that appears unlikely. (more…)