Canada’s Magna International Inc., a key player in the North American auto supply chain caught in the epicenter of President Donald Trump’s tariff blitz, said its adjusted earnings and revenue slipped during the first quarter, but it maintained or improved most of its 2025 forecasts.
The world’s third-largest auto supplier said adjusted first-quarter earnings — which figure out various one-time costs, gains and intangibles — fell 24 percent to $354 million. The company said it faced higher warranty costs for its seating business. Net income increased to $146 million from $9 million in the same quarter last year.
Revenue fell 8 percent to $10.1 billion during the quarter, reflecting a 5 percent decline in North American vehicle production and an 8 percent decline in vehicle output in Europe.
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CEO Swamy Kotagiri, in a statement, said operating results for the first quarter “exceeded our expectations, with strong incremental margins on better than anticipated vehicle production.”
“For the balance of the year, we remain confident in our ability to execute on variables within our control in a complex and uncertain industry environment. We are actively advancing several initiatives including operational excellence, restructuring, commercial recoveries, and reduced capital and engineering spending to mitigate the impact of tariffs.”
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The company slightly improved its forecast for sales and equity income but lowered its anticipated range of profit margins for 2025.
Magna said the updated guidance is primarily tied to the higher value of the euro against the U.S. dollar. Every one-cent change in the exchange rate represents a roughly $110 million annual shift in sales, Kotagiri told analysts on a May 2 conference call. These gains on foreign exchange will be partially offset by modestly lower vehicle volumes in North America, he said.
The updated outlook does not take the potential impact of tariffs into account.
The company estimated its direct tariff impact at $250 million for 2025, based on the roughly $2 billion in goods it imported into the U.S. in 2024 that would have been subject to tariffs. Between 75 and 80 percent of Magna’s parts sold in North America that cross a border are already compliant with the United States-Mexico-Canada Agreement, Kotagiri said, making them exempt from tariffs.
“We continue to evaluate options that will further increase USMCA compliance to mitigate tariff impacts. In some instances, it will require design modifications, validation and our customers’ approval.”
Kotagiri said Magna continues to look for more certainty on whether USMCA-compliant parts will remain exempt long term, but the company is working under that assumption. While parts imports into the U.S. were expected to face tariffs as early as May 3, a set of executive orders signed by Trump on April 29 will keep USMCA-compliant parts tariff-free, for now.
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In instances that tariffs cannot be avoided, Kotagiri said Magna has “clearly communicated” to customers that the supplier will pass on any tariff costs.
But Magna warned in its quarterly report the wider economic uncertainty and industry fallout fueled by tariffs risk raising costs for the company, its customers and vehicle buyers.
“Measures implemented by the current U.S administration have created an unpredictable trade environment by imposing or expanding tariffs, and in some cases, modifying or suspending some of the tariffs recently imposed. Such tariffs, together with retaliatory measures, risk increasing our input costs, the prices paid by our customers for our products, as well as the price consumers pay for vehicles.
“Significant or sustained tariff costs which are not recovered from our customers could have a material adverse effect on our profitability. Additionally the extent tariffs erode vehicle affordability, consumer demand for vehicles may decline, prompting a reduction in vehicle production volumes, which is a material driver of our operations, sales and profitability.”
The company reported sales decreases in its four main business segments: body exteriors, power and vision, seating and complete vehicles. The complete vehicles and power units posted gains in adjusted earnings, while Magna’s seating unit was stung by $30 million warranty-related charge that is “now behind us,” Kotagiri said. The seating customer’s name was not disclosed.
On an adjusted basis, Magna earned 78 cents per share for the quarter through March, compared with analysts’ estimates of 90 cents per share, according to data compiled by LSEG, Reuters reported.
Shares in Magna fell 5.6 percent to close at $33.06 on May 2.
Magna, based near Toronto, ranked No. 3 on Automotive News’ list of the top 100 global suppliers in 2024 with worldwide sales to automakers of $42.8 billion in 2023.
