Magna Reports Disappointing Q4 Results and New 2023 Guidance; FVE Cut to $75 From $83

No-moat-rated Magna reported fourth-quarter earnings per share before special items of $0.91, $0.12 under the FactSet consensus estimate of $1.03 and $0.39 below the $1.30 result reported last year. Despite less chip crunch impact, the shortfall was attributable to headwinds, including continued chip-related production shutdowns, higher warranty expense, operational problems in a European facility, higher energy costs, China COVID-19 resurgence, and inflationary cost pressures. Revenue increased 5% to $9.6 billion from $9.1 billion in the prior year as customer call-offs continued but lessened and due to raw material cost recoveries. The top line was nearly flat with the consensus. Organic revenue, excluding currency, increased 13%, outperforming a 5% increase in global production, weighted to Magna’s customer base, by 8% points.