Auto parts maker Magna International Inc. is warning tariffs would be devastating for the company but says it’s ready to deal with what comes.
“I believe this is going to be destructive,” said company chief executive Swamy Kotagiri on an earnings call with analysts on Friday. “We’re not looking forward to that but that muscle is there and we have to work through this.”
The auto sector is facing immense uncertainty as U.S. President Donald Trump threatens to impose blanket tariffs of 25 per cent on imports from Canada and Mexico into the country early next month. Auto parts are particularly vulnerable in this situation because they can cross North American borders multiple times before ending up in a finished vehicle.
“It really is an industry issue that you have to solve holistically and not in isolation,” said Kotagiri.
“For a supplier to absorb this magnitude that they’re talking about is really unrealistic and unattainable.”
Kotagiri said the company has been having “significant” discussions with its customers and policymakers since December.
But he warned, “this is not a switch that can be turned on and off in the short term,” and could have long-term effects.
His comments came as Magna reported its latest quarterly results for the last three months of 2024.
The Aurora, Ont.-based manufacturer raised its dividend as it posted a fourth-quarter profit attributable to the company of US$203 million.
The company, which keeps its books in U.S. dollars, said it will now pay a quarterly dividend of 48.5 cents US per share, up from 47.5 cents US.
The increased payment came as Magna says its profit amounted to 71 cents US per diluted share for the quarter ended Dec. 31, down from US$271 million or 94 cents US per diluted share in the last three months of 2023.
Sales for the quarter totalled US$10.63 billion, up from $10.45 billion a year earlier.
On an adjusted basis, Magna said it earned US$1.69 per diluted share in its latest quarter, up from an adjusted profit of US$1.33 per diluted share a year earlier.
In its outlook for 2025, Magna expects total sales between US$38.6 billion and US$40.2 billion and adjusted net income attributable to Magna of US$1.3 billion to US$1.5 billion for the year.