Auto parts maker Magna International Inc. is warning tariffs would have a negative impact on the auto industry, but says it’s ready to deal with what comes.
“I believe this is going to be disruptive,” said company chief executive Swamy Kotagiri Friday on an earnings call with analysts.
“We’re not looking forward to that but that muscle is there and we have to work through this.”
The auto sector is facing immense uncertainty as U.S. President Donald Trump threatens to impose blanket tariffs of 25 per cent on imports from Canada and Mexico into the country early next month. Auto parts would be particularly vulnerable because they can cross North American borders multiple times before ending up in a finished vehicle.
“It really is an industry issue that you have to solve holistically and not in isolation,” said Kotagiri.
“For a supplier to absorb this magnitude that they’re talking about is really unrealistic and unattainable.”
Magna has about 142 manufacturing facilities across Canada, the U.S. and Mexico and employs more than 73,000 workers across North America.
Kotagiri said the company has been having “significant” discussions with its customers and policymakers since December.
But he warned, “this is not a switch that can be turned on and off in the short term,” and could have long-term effects.
His comments came as Magna reported its latest quarterly results for the last three months of 2024.
The Aurora, Ont.-based manufacturer raised its dividend as it posted a fourth-quarter profit attributable to the company of US$203 million.
The company, which keeps its books in U.S. dollars, said it will now pay a quarterly dividend of 48.5 cents US per share, up from 47.5 cents US.
The increased payment came as Magna says its profit amounted to 71 cents US per diluted share for the quarter ended Dec. 31, down from US$271 million or 94 cents US per diluted share in the last three months of 2023.
On an adjusted basis, Magna said it earned US$1.69 per diluted share in its latest quarter, up from an adjusted profit of US$1.33 per diluted share a year earlier.
Sales for the fourth quarter increased two per cent to US$10.63 billion year-over-year.
Magna lowered its 2026 revenue outlook to between $40.5 billion and $42.6 billion from its previous forecast, which ranged between $48.8 billion to $51.2 billion. It also predicts a weaker first quarter of this year.
“Our outlook reflects the two per cent decline in weighted global vehicle production in 2025 and no growth over the 2024 to 2026 period,” said Patrick McCann, Magna’s chief financial officer.
An overall weaker macroeconomic picture drove the forecast lower, McCann said, while the company noted the outlook doesn’t take into account the effects of potential tariffs.
“The industry has been experiencing a high degree of volatility related to a number of factors including electric vehicle penetration rates, government policies, market share shifts, and the overall macro environment,” he told investors on the conference call.
“These have made forecasting more difficult than it has been in the past.”
Magna shares were trading 4.7 per cent lower at $53.62 on Friday afternoo
