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UPDATE 2-Magna International misses profit estimates, warns on border tax

Published 2017-02-24, 11:12 a/m
© Reuters.  UPDATE 2-Magna International misses profit estimates, warns on border tax
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* Adj profit of $1.31 misses est of $1.36

* Profit misses on higher costs

* Shares down 5.7 pct in Toronto (Adds details, shares)

Feb 24 (Reuters) - Auto parts maker Magna International Inc's MG.TO MGA.N profit missed estimates for the first time in five quarters, and the Canadian company warned that a proposed border tax by the United States could hurt the automobile industry.

The company's shares were down 5.7 percent at C$55.47 on the Toronto Stock Exchange on Friday, while its U.S-listed stock was down 5.8 percent at $42.55.

"Any border adjustment tax I think would be negative for the whole industry," a company executive said on a post-earnings conference call.

U.S. House Republicans are pushing for the border adjustment tax as a way to boost U.S. manufacturing and pay for corporate tax cuts.

The plan, which would essentially tax imports but not exports, faces opposition from retailers, oil refiners and automakers who say it could raise prices for American consumers.

In an exclusive interview to Reuters on Thursday, U.S. President Donald Trump spoke positively about the border adjustment tax. primarily an auto parts supplier, also assembles cars under contract from motor vehicle manufacturers. General Motors Co (NYSE:GM) GM.N , Volkswagen AG VOWG_p.DE , BMW BMWG.DE and Ford Motor (NYSE:F) Co F.N are among its biggest customers.

Also, Magna's Mexican operations account for 14 percent of the company's total sales.

This could be hit by Trump's move to renegotiate the North American Free Trade Agreement, with a focus on cutting United States' large trade deficit with Mexico.

"The continued growth of protectionist sentiments and implementation of measures which impede the free movement of goods, services, people and capital could have a material adverse effect on our operations, profitability or results of operations," the company said in a statement.

Aurora, Ontario-based Magna also raised its quarterly dividend on Friday to 27.5 cents from 25 cents.

Magna said cost of goods sold jumped 7.7 percent to $7.90 billion in the fourth quarter ended Dec. 31.

Vehicle assembly sales in the quarter fell about 30 percent to $439 million.

The company said it expects total 2017 sales to be between $36.0 billion-$37.7 billion, compared with sales of $36.45 billion in 2016.

Net income attributable to Magna rose to $478 million, or $1.24 per share, in the fourth quarter, from $476 million, or $1.17 per share, a year earlier. items, the company earned $1.31 per share, missing the average analysts' estimate of $1.36, according to Thomson Reuters I/B/E/S.

Magna's total sales rose 8 percent to $9.25 billion, beating estimates of $9.23 billion.

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