By GREG KEENAN
Wednesday, January 17, 2018
The era of the internal combustion engine is far from over, Magna International Inc. says, issuing a forecast that, by 2025, 94 per cent of all vehicles will still contain a traditional engine.
That domination will shrink later in the 2020s, the auto parts giant said Tuesday, pointing to 13 per cent of vehicles being battery- or fuel-cell-powered by 2030.
The best opportunity for Magna to win business is from plug-in hybrid electric vehicles, chief executive officer Don Walker told an analyst conference in Detroit.
Magna has the capability to provide $3,000 (U.S.) worth of parts on such vehicles, compared with $2,000 on an internal-combustion-powered, all-wheel-drive vehicle and $2,500 on an electric vehicle with all-wheel-drive.
"We believe Magna is uniquely positioned to capitalize on the key trends," Mr. Walker said.
"Our strategy has always been to take the power, however it is generated, to the wheels," Mr. Walker said.
The presentation to analysts followed the company's annual release of its outlook for sales and vehicle production earlier Tuesday.
Magna said its sales between 2017 and 2020 will grow faster than vehicle output. U.S. vehicle production is expected to remain flat, while auto makers in Europe are forecast to assemble 22.9 million vehicles annually by 2020, compared with 22.2 million in 2017.
Output by auto makers globally is expected to grow 3 per cent on average annually from 2017 through 2020, while Magna is forecasting its sales will grow between 5 per cent and 8 per cent annually.
"Our significant growth in Europe and Asia creates more balanced geographical diversification," chief financial officer Vince Galifi told the conference.
Magna is anticipating 2017 revenue of between $35.9-billion and $37.1-billion.
Revenue is forecast to grow to between $42.7-billion and $45.7-billion by 2020.
Revenue in 2016, the last full year for which data are available, totalled $36.4billion.
The Magna revenue forecasts imply profit ranging from $6.49 a share to $7.05 a share in 2018, BMO Capital Markets analyst Peter Sklar said in a note to clients. His previous estimate for 2018 share profit was $6.50.
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Magna International is touting its 'balanced geographical diversification,' which would include this parts plant in Puebla, Mexico.
BRETT GUNDLOCK/THE GLOBE AND MAIL