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Magna says 2019 outlook to be hurt by unit sale, stronger US dollar

Magna International Inc. issued its 2019 forecast for net income attributable to the company at $2.1 billion to $2.3 billion as it expects revenue to be hit by the sale of its global fluid pressure and controls business and a strong U.S. dollar.

The 2019 net income outlook is lower than the auto parts maker's attributable net income outlook range of $2.3 billion to $2.4 billion in 2018. The Ontario, Canadian-based auto-parts maker is scheduled to announce its full-year 2018 results on Feb. 22.

The company forecast total sales of $40.2 billion to $42.4 billion in 2019, slightly above the 2018 sales outlook of $40.3 billion to $41.4 billion issued by Magna in its third-quarter results.

Magna expects EBIT margin of 7.3% to 7.6% and capital spending of about $1.7 billion in 2019.

"We expect to grow sales and earnings over our outlook period while continuing to build long-term value for our shareholders. We are seeing further growth opportunities related to autonomy, electrification, electronic systems and lightweighting across our business," Magna CEO Don Walker said.

Magna further expects its North America business to be negatively impacted by General Motors Co.'s closure of three assembly plants in 2019 as part of a wider reorganization by the Detroit carmaker.

For 2021, the company expects total sales to gradually increase to $42.4 billion to $45.4 billion and EBIT margin to rise to 8.1% to 8.5%. despite its expectation of "relatively level" light vehicle production across key markets of North America and Europe.

Free cash flow is expected to increase to a cumulative total of more than $6.5 billion in the 2019-2021 timeframe as compared to over $6 billion in the 2018-2020 period, reflecting an anticipated increase in earnings and relatively level capital spending.