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Auto parts maker Magna sees initial hit from Canadian bridge blockade

Economy Feb 11, 2022 11:41AM ET
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© Reuters. Magna logo is during Munich Auto Show, IAA Mobility 2021 in Munich, Germany, September 8, 2021. REUTERS/Wolfgang Rattay
 
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By Shivansh Tiwary

(Reuters) - Auto parts maker Magna International (NYSE:MGA) Inc said on Friday disruptions at the Ambassador bridge caused by Canadian trucker protests against coronavirus mandates have started to have some initial impact on its operations.

The protesters, who have caused a gridlock in the Canadian capital since late January, have since Monday used their big rigs to snarl traffic at the bridge, which serves as a supply route for Detroit's carmakers.

The situation at the bridge has forced some customers to idle or cut production requirements, Magna Chief Executive Officer Swamy Kotagiri said on an earnings call.

"If the gridlock lasts for longer, it could affect big Canadian suppliers such as Magna and Linamar Corp and it might affect Magna's bottom-line numbers in the (current) quarter," said Sam Fiorani, vice president at AutoForecast Solutions LLC.

U.S.-listed shares of Magna dropped nearly 4.3% to $77.42, while its Toronto stock fell 4.4% to C$98.50.

Toyota Motor (NYSE:TM) Corp, General Motors Co (NYSE:GM), Ford and Chrysler-parent Stellantis have said they have been forced to cancel or scale back some production due to the protests.

The protests have piled more pressure on a North American auto industry wrestling with a fragile supply chain and a global chip shortage that has wreaked havoc with production since the outbreak of the pandemic.

Magna reported a 13.7% drop in fourth-quarter net sales to $9.11 billion, but beat analysts' estimates of $8.95 billion.

In terms of headwinds, expect continued semiconductor supply constraints to impact production in 2022, CEO Kotagiri said on the call.

However, the company expects semiconductor availability to impact production more significantly in the first half of the year.

The Ontario-based company estimated full-year revenue of $38.8 billion to $40.4 billion, compared with the $36.24 billion it reported for 2021.

Analysts on average were expecting $39.47 billion, according to Refinitiv IBES data.

Auto parts maker Magna sees initial hit from Canadian bridge blockade
 

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