Canada’s largest auto parts manufacturer cut its full-year financial outlook on Friday as the General Motors strike in the United States and lower global vehicle production dragged sales down.
Magna International (MG.TO), which reports in U.S. dollars, saw sales fall three per cent, or $299 million, to $9.32 billion in the three month period ending Sept. 30. The Aurora, Ont.-based company cited the 40-day labour strike at GM – one of Magna’s largest customers – as a key contributor to the sales decline.
“While a new labour agreement was ratified and production resumed starting on Oct. 26, our sales to GM, and profits derived from such sales, declined as a result of lost vehicle production,” the company said in a financial filing.
“The collective impact of the GM strike and a potential strike at Fiat Chrysler’s operations in the United States could have a material adverse effect on our sales and profitability.”
Magna also said it now expects its full-year sales to be between $38.7 billion and $39.8 billion, down from its earlier expectations of between $38.9 billion and $41.1 billion. The company expects its net profit range to be between $1.8 billion and $1.9 billion, down from between $1.9 billion and $2.1 billion.
“We have made some adjustments to our outlook largely to reflect estimated lost volume related to the GM strike and higher launch costs,” Magna’s chief financial officer Vince Galifi said in a statement.
The strike by nearly 50,000 members of the United Auto Workers union reverberated throughout the highly-integrated automotive industry, with many automakers and parts manufacturing companies forced to lay off employees as production came to a halt.
Magna is not the only auto parts company that has been affected by the GM strike. Linamar CEO Linda Hasenfratz said last month the strike was costing it as much as $1 million per day.