UPDATE 1-Magna forecasts 2024 profit below estimates on weak EV demand
(Adds shares in paragraph 2, comments from conference call, analyst)
Feb 9 (Reuters) - Canadian auto parts supplier Magna International forecast its 2024 profit below estimates on Friday, weighed by cooling demand for electric vehicles (EV) and inflationary pressures.
U.S.-listed shares of the company were down 6% in morning trade.
Auto parts suppliers including Magna's rival BorgWarner have been hit by higher labor and raw material prices and a slowdown in demand for EV parts, as automakers shift focus to higher-margin hybrid and gas-powered vehicles.
Expected EV penetration rates have been pushed out, which is having some negative impact on Magna's anticipated short and midterm sales growth, Magna CEO Swamy Kotagiri said on a call with analysts.
The Aurora, Ontario-based company expects full-year profit in the range of $1.60 billion to $1.80 billion, compared with analysts' average expectations of $1.90 billion, according to LSEG data.
"The industry appears to be moving from a supply constraint to a demand constraint as macro challenges persist," Kotagiri added.
On an adjusted basis, the company earned a profit of $1.33 per share for the fourth quarter ended Dec. 31, missing analysts' expectations of $1.48.
"We maintain a "Hold" rating on Magna's stock, as the miss and disappointing guidance should weigh on the shares," CFRA senior equity analyst Garrett Nelson said.
Fourth-quarter sales rose 9.2% to $10.45 billion, in line with a Wall Street consensus.
On Thursday, peer BorgWarner forecast its 2024 profit and revenue below street expectations. (Reporting by Nathan Gomes and Shivansh Tiwary in Bengaluru; Editing by Vijay Kishore)
