Magna Q4 Earnings: Beats Expectations, Slashes 2026 Sales Target Amid EV Uncertainty, Market Shifts

Magna International Inc. (TSX: MG; NYSE: MGA) reported its fourth-quarter and full-year 2024 earnings on February 14, 2025, beating analyst expectations and providing guidance for the coming years. The auto parts maker's shares traded lower in premarket on Friday, February 14, despite the positive earnings report, as investors digested the company's revised sales and earnings outlook.

Magna's fourth-quarter sales grew by 2% year-over-year to $10.63 billion, surpassing the analyst consensus estimate of $10.34 billion. The company's operating income before income taxes for the quarter was $381 million, with an operating margin of 3.6%. Adjusted EBIT was $689 million with an adjusted EBIT margin of 6.5%. Adjusted EPS of $1.69 beat the consensus estimate of $1.52.

The company's Board declared a dividend of $0.485 per share, payable on March 14, 2025, to shareholders of record as of the close of business on February 28, 2025. This represents a 2% higher dividend than the third quarter dividend of $0.475 per share.

Magna's outlook for 2025 includes sales of $38.6 billion to $40.2 billion, with an adjusted EBIT margin of 5.3% to 5.8%. The company expects capital spending to normalize to historical levels beginning in 2025. For 2026, Magna anticipates sales of $40.5 billion to $42.6 billion, with an adjusted EBIT margin of 6.5% to 7.2%. The company expects free cash flow of $1.5 billion or more by 2026.

Magna's CEO, Swamy Kotagiri, commented on the company's performance and outlook: "In 2024, we successfully drove margin expansion and increased cash flow generation through deliberate actions related to operational excellence, restructuring, reduced capital spending, and commercial recoveries. We achieved this despite continued industry headwinds, including lower vehicle volumes in key markets. As we begin 2025, we remain focused on multiple activities to drive further margin expansion, strong free cash flow generation, and increased return on investment."

Magna's strategic focus on electrification and powertrain systems positions it well to capitalize on the transition to electric vehicles (EVs). The company's partnership with Mercedes-Benz for the G-Wagon's electric powertrain, for instance, demonstrates Magna's ability to adapt and innovate in the face of changing market demands. However, the increasing demand for EVs also presents challenges, such as securing long-term, reliable supply of critical components like silicon carbide (SiC) chips. Magna's long-term supply agreement with onsemi for SiC chips ensures a secure supply of critical components for its eDrive systems, further strengthening its position in the EV market.

Magna's strategic partnerships, such as the one with Mercedes-Benz for the G-Wagon's electric powertrain, play a significant role in the company's growth strategy. These alliances enable Magna to drive innovation, enhance product offerings, and mitigate market uncertainties. By collaborating with leading automakers, Magna can develop and integrate cutting-edge technologies, such as the eDS Duo electric drive system, into its products. This helps Magna stay competitive and attract more customers in the rapidly evolving automotive market.



In conclusion, Magna International Inc. reported strong fourth-quarter earnings, beating analyst expectations and providing guidance for the coming years. The company's strategic focus on electrification and powertrain systems, along with its strategic partnerships, positions it well to capitalize on the transition to electric vehicles. However, the increasing demand for EVs also presents challenges, such as securing long-term, reliable supply of critical components. Investors should monitor Magna's progress in navigating these challenges and opportunities as the company continues to drive margin expansion, strong free cash flow generation, and increased return on investment.