Magna lifts outlook, dividend after topping forecasts

It forecast total production sales at between $27 billion and $28 billion, up from the $26.5 billion to $27.5 billion range it had forecast in January.

Production sales are sales from Magna's core business of manufacturing vehicle parts and exclude its smaller vehicle-assembly and tooling operations.

Strong north American sales

Fourth-quarter profit rose to $351 million, or $1.49 a share, from $312 million, or $1.32, a year earlier. The latest figure topped analysts' average forecast of $1.14 a share.

Sales for Magna, which makes parts ranging from mirrors and auto bodies to electronics and powertrain systems, rose 11 percent to $8.03 billion, in the quarter, exceeding analysts' $7.74 billion forecast.

The company said North American production sales increased 12 percent in the quarter to $3.9 billion, largely reflecting a 12 percent increase in vehicle production to 3.8 million units.

It expects to take a restructuring-related charge of about $150 million this year.

Magna, which also manufactures complete vehicles on a contract basis, has been pushing to turn around inefficient operations in Europe.

CIBC's Coupland said Europe, where production sales rose just 2 percent in the fourth quarter, is the biggest risk factor for Magna.

Magna, whose competitors include Johnson Controls Inc and TRW Automotive Holdings Corp, posted an overall loss last year for operations in what it calls the rest of the world, generally outside North America and Europe. The segment is a key focus area for Magna, which is investing heavily in China.

South American operations were challenging, the company said, due to a combination of start-up costs, inefficiencies, currency issues, and negotiations with customers.

The company also said it was looking at how to use its large cash pile.

"We're looking at it a lot. Not going to talk specifically about what we're going to do, obviously, until we get something complete, but it's a high priority," Chief Executive Don Walker said during a conference call with analysts.

"We don't want to be sitting on $1 billion of cash just to be sitting on $1 billion of cash."

Shares of Magna closed C$2.17 higher at C$57.02 on the Toronto Stock Exchange on Friday and up $2.29 at $55.51 on the New York Stock Exchange.