UPDATE 1-Magna lifts annual forecasts as results beat estimates on parts demand

(Adds CEO quote in paragraph 3, analyst comment in paragraph 7, shares in paragraph 2)

Aug 4 (Reuters) - Canada's Magna International on Friday raised its full-year profit and sales outlook after its quarterly results beat estimates on solid demand for parts, as automakers ramp up production.

Magna shares, however, dropped 3.5% as the company flagged labor concerns that have been a problem for the industry already battling higher costs of raw materials and other inflationary headwinds.

"There are concerns about upcoming OEM labor negotiations when union contracts expire in September which may have short-term impacts on production," CEO Seetarama Kotagiri said during an investor call.

United Auto Workers (UAW) is seeking improved benefits including double-digit pay rises and defined-benefit pensions for all workers in its talks with automakers Ford Motor General Motors and Chrysler Stellantis, also known as the Detroit Three.

Magna expects 2023 revenue between $41.90 billion and $43.50 billion, compared with its previous forecast of $40.20 billion to $41.80 billion.

The company raised its adjusted annual income outlook to between $1.40 billion and $1.60 billion, from $1.30 billion to $1.50 billion forecast earlier.

Magna's forecast raise and upbeat results reflect a stronger-than-expected rebound in global vehicle production, particularly in Europe and North America, CRFA analyst Garrett Nelson said.

The company reported adjusted earnings per share of $1.50 during the second quarter, compared with analysts average estimate of $1.23 per share, according to Refinitiv data.

Its second-quarter revenue rose 17% to $10.98 billion, topping estimates of $10.30 billion. ($1 = 1.3360 Canadian dollars) (Reporting by Nathan Gomes and Pratyush Thakur in Bengaluru Editing by Vinay Dwivedi)