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Magna International Inc. (MGA - Analyst Report) revealed that its exterior and interior systems unit has expanded in China by forming a joint venture, MCC Wuhu Exteriors, to purchase an existing 300,000-square-foot injection molding and painting facility in Wuhu, located in the Anhui province of southeastern China.
The joint venture is controlled by Magna Exteriors and Interiors (51%), Changshu Automotive Trim Co. (34%) and Chery Tech (15%).
The Wuhu plant generated revenues of approximately $43 million in 2010. It employs about 600 people and supplies its primary customer Chery Auto with front and rear fascias.
Magna, a Zacks #3 Rank (Hold) stock, is a leading manufacturer and supplier of automotive components based in Aurora, Canada. The company designs, develops and manufactures automotive systems, assemblies, modules and components, besides engineering and assembling complete vehicles, primarily for sale to original equipment manufacturers of cars and light trucks. Its primary competitors include Dana Holding Corporation (DAN - Snapshot Report) and Lear Corp. (LEA - Snapshot Report).
In the second quarter of the year, the company posted a decrease in profit to $272 million or $1.11 per share from $315 million or $1.39 per share in the prior-year quarter (all excluding unusual items). With this, the company has missed the Zacks Consensus Estimate of $1.36 per share.
Revenues in the quarter rose 24% to $7.34 billion driven by increase in sales in all its operations. However, operating income decreased by $5 million to $362 million in the second quarter of 2011, mainly due to higher cost of goods sold (27%) and selling, general and administrative expenses (11.5%).
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