10:41 AM EDT, 05/03/2024 (MT Newswires) -- Magna International ( MGA ) on Friday lowered its full-year sales outlook on the back of a weaker-than-expected first quarter, impacted by impairments and restructuring costs related to Fisker (FSR).

The Canadian auto parts supplier now anticipates sales to come in between $42.6 billion and $44.2 billion for the 2024 financial year, down from its previous projections of $43.8 billion to $45.4 billion. The consensus on Capital IQ is for revenue of nearly $44.5 billion. Magna's New York Stock Exchange-listed shares declined 2.3% in Friday trade.

Adjusted net income is pegged at $1.5 billion to $1.7 billion versus the prior guidance of $1.6 billion to $1.8 billion. The company reiterated its adjusted earnings before interest and taxes margin forecast of 5.4% to 6%.

"We are maintaining our adjusted EBIT margin outlook for 2024 despite the negative impact of assuming no additional Fisker Ocean production and lower sales on program delays and mix," Chief Executive Swamy Kotagiri said during an earnings call, according to a Capital IQ transcript. Magna builds the Ocean sports utility vehicle for Fisker, which recently said that it could file for bankruptcy protection if its liquidity issues are not resolved.

Magna continues to expect light vehicle production to reach 15.7 million and 17.4 million units in North America and Europe, respectively, this year. It is now looking at 29 million units in China, compared with its previous target of 28.3 million units.

For the March quarter, the company posted adjusted earnings of $1.08 a share, down from $1.15 the year before and missing the Street's view for $1.24. Sales increased 3% to $10.97 billion, but were just shy of analysts' $10.98 billion estimate.

Magna said it recorded $316 million in asset impairments and restructuring costs related to Fisker. The costs include a $261 million impairment charge on Fisker-related assets, given the expected lack of future cash flows and growing concerns over the electric vehicle maker's ability to continue as a going concern.

"We have $195 million in deferred revenue associated with the Fisker contract that could offset the $294 million in asset impairments that cannot be recorded in (the first quarter)," Kotagiri said on the call. "This amount will be recognized in income as performance obligations are satisfied or upon termination of the fiscal contract manufacturing agreement."

Global light vehicle production rose 2%, including increases of the same percentage in North America and 12% in China, although Europe saw a 2% decrease. New program launches and the acquisition of Veoneer Active Safety in 2023 benefited sales, partially offset by lower volumes in the company's complete vehicles segment and a strengthening US dollar.

Revenue for the body exteriors and structures segment remained nearly flat at $4.43 billion, while power and vision climbed to $3.84 billion from $3.32 billion. Seating systems sales fell to $1.46 billion from $1.49 billion, while complete vehicles dropped to $1.38 billion from $1.63 billion.

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