Magna provides update on COVID-19 and withdraws outlook
Aurora, Ont. – Magna International provided an update on a number of actions related to the COVID-19 pandemic.
Magna has established internal task forces to assess, monitor and deal with the potential impact of COVID-19 on the business and share information across the company. Magna continues to adjust operations and take actions to protect the health of employees, suppliers and visitors.
A number of OEM customers, particularly in North America and Europe, have initiated production downtime or have reduced production rates. It is uncertain whether OEMs will extend production downtime or further lower production rates as circumstances evolve. While specific production schedules for our operations vary by location and customer, many of the facilities have reduced or suspended operations for reasons related to the COVID-19 pandemic, including as a result of government-ordered restrictions. For the facilities that continue to operate due to customer schedules, Magna is taking steps to safeguard employees through enhanced administrative controls, employee monitoring strategies, more rigorous cleaning practices and physical distancing.
“During this unprecedented time, we remain focused on the health and safety of our employees and the communities in which Magna operates, while continuing to support our customers around the world. I remain confident in our resilience in the face of rapidly changing developments due to the COVID-19 pandemic, as well as our ability to respond to changing market conditions. We believe we are putting the appropriate plans in place to manage through these challenging times, while also focusing on opportunities that may further position Magna for the future,” said Don Walker, Magna CEO.
Following an extended period of production downtime in February, operations in China continue to ramp up along with the overall local industry. While business activity continues to increase, it remains below the production levels anticipated earlier this year.
“We are taking actions across our organization to reduce costs and capital spending in order to mitigate the impacts of declining vehicle production on our cash flow. By design, our balance sheet is strong, which we believe will allow us to withstand a potential significant downturn and capitalize on opportunities,” said Vince Galifi, Magna CFO.
Given the high degree of business uncertainty caused by COVID-19, Magna is withdrawing its outlook. The company will next provide a general business update when it reports its first quarter 2020 results and will resume providing an outlook at a future date. In the meantime, investors should take comfort from the fact that Magna have liquidity of approximately $4 billion including approximately $1 billion in cash and $3 billion in available, committed credit lines at February 29, 2020.
Reflecting Magas commitment to the communities in which its operate, Magna is working creatively to help source and produce critically-needed supplies and equipment for the health care sector. Magna’s global purchasing organization has been successful in securing significant quantities of masks for local hospitals and health care authorities.