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Magna International posts higher quarterly net income, raises dividend

Auto parts and equipment manufacturer Magna International Inc. posted higher net income year over year in the fourth quarter of 2017 as sales rose 12.3%, boosted by higher vehicle production volumes in Europe.

Net income was $556 million, or $1.53 per share, for the fourth quarter of 2017, up from $478 million, or $1.24 per share, in the year-ago quarter.

Magna said re-evaluation of its deferred tax balances due to the enactment of the new U.S. tax law had a positive impact of 6 cents per share on its fourth-quarter EPS.

Adjusted EPS for the quarter was $1.57, up from $1.31 in the prior-year period and slightly above S&P Capital IQ's consensus normalized EPS estimate of $1.56.

Sales rose 12.3% year over year to $10.39 billion from $9.25 billion as European complete vehicle assembly sales jumped 129% reflecting launches of the BMW 5-Series and Jaguar E-Pace during the year. Vehicle production volumes in Europe increased 6.9% year over year, and external production sales increased to $2.71 billion from $2.20 billion.

In North America, vehicle production volumes declined 5.0% from the year-ago quarter, and external production sales edged down to $4.87 billion from $4.88 billion. External production sales in Asia declined to $644 million from $663 million in the prior-year period.

Magna's board raised the quarterly dividend to 33 cents per common share, an increase of 20% from the previous quarter's payout of 27.50 cents. The first-quarter dividend is payable March 23 to shareholders of record on March 9. The company repurchased 6.7 million shares for $366 million during the quarter.

For full-year 2017, Magna's net income came in at $2.21 billion, or $5.90 per share, up from $2.03 billion, or $5.16 per share, in 2016. Adjusted EPS for 2017 was $5.96 per share, up from $5.23 in 2016 and slightly above S&P Capital IQ's estimate of $5.95.

Net income is projected to be in the range of $2.3 billion to $2.5 billion for 2018. Total sales are projected to be between $39.3 billion and $41.5 billion for the year.