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News from Reuters

Magna rides cost cuts to profit but sales drop

05/11/09

TORONTO (Reuters) - Cost reductions and restructuring at Magna International Inc led the auto-parts maker to a surprise quarterly profit even as reduced production at North American and European automakers push its revenue down 16 percent.

The Canadian company, whose deal to take a big stake in General Motors Co's European operations fell through this week, reported on Thursday net income of $51 million, or 45 cents a share, for the third quarter. That compares with a net loss of $215 million, or $1.93, a year earlier, when it booked $234 million of unusual items.

Sales in the quarter fell 16 percent to $4.67 billion.

Analysts on average had expected a loss of 19 cents a share, on revenue of $4.53 billion, according to Thomson Reuters I/B/E/S.

Magna reported its results after market close. Its shares ended the day down 27 Canadian cents, or 0.6 percent at C$47.07 on the Toronto Stock Exchange. The stock rose 10.1 percent on Wednesday after the deal with GM fell through.

GM's board of directors had approved the sale of a 55 percent stake in German-based Opel to Magna and its Russian partner Sberbank for 500 million euros.

But the board reversed its decision late on Tuesday, prompted by improved business conditions and the strategic importance of Opel as a small-car platform for GM going forward.

Aurora, Ontario-based Magna said its average dollar content per vehicle rose 8 percent in North America and was roughly flat in Europe from the third quarter of 2008.

Complete vehicle assembly sales were down 38 percent at $428 million, while complete vehicle assembly volumes fell 42 percent to about 14,700 units, Magna said.

Its operating profit in the quarter was $81 million, compared with an operating loss of $112 million a year earlier.

($1=$1.07 Canadian)

(Reporting by John McCrank; editing by Frank McGurty)

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