Magna International, the Ontario-based parts supplier and vehicle assembler, failed to meet analysts’ expectations in its second-quarter earnings report.
The company saw a 2% drop in its shares due to interruptions in the production of certain vehicles and a reduction in automobile assembly volumes.
Magna, which counts BMW, Mazda, and Ferrari among its clients, has experienced a decline in sales following the cessation of production for some programmes, such as the BMW 5 Series.
The company is also facing challenges due to layoffs in its complete vehicle operations, which began earlier this year.
It anticipates that the cancellation of INEOS Automotive’s vehicle programme could lead to a loss in sales of approximately 700 million dollars.
In May, Magna recorded asset impairments and restructuring costs of 316 million dollars related to the struggling electric vehicle startup Fisker.
Demand for automotive parts and services had risen in recent years, but this has taken a significant hit as car manufacturers shift away from costly electric vehicle plans in favour of petrol models.
CFRA analyst Garrett Nelson noted that Magna’s complete vehicle unit is adversely affecting consolidated margins.
Additionally, Fisker’s bankruptcy and the challenges faced by other electric vehicle manufacturers have become substantial headwinds for the supplier.
In contrast, Magna’s rival Aptiv exceeded Wall Street’s expectations for quarterly profits.
However, revenue from its electrical components segment fell by 3% due to reduced production by some customers.
In response to current difficulties, Magna has lowered its 2026 sales forecast to a range of 44.0 billion dollars to 46.5 billion dollars, compared to the previous estimate of 48.8 billion dollars to 51.2 billion dollars.
On an adjusted basis, the company earned 1.35 dollars per share in the second quarter, falling short of the 1.44 dollars estimate, according to LSEG data.
