Magna Q3 profit soars; company founder Frank Stronach resigns from board
By The Canadian Press
By The Canadian Press
Frank Stronach has resigned from the board of Magna International Inc., the autoparts giant he founded in his garage in 1957.
Magna announced the departure Thursday in its third-quarter earnings report, which showed a big increase in profits, boosted by a revaluation of its E-Car business.
Stronach said in a statement that in the two years since he gave up control of the company he has become involved in a number of activities outside the automotive industry.
Earlier this year, he formed a new political party that proposes reforming the euro and introducing a flat tax in Austria.
“I do not want my political views to be confused with my role on Magna’s board,” he said. “As a result, I feel the time is right to step down.”
However CEO Don Walker said Stronach’s resignation will not change the way the company is run.
“Frank has made enormous contributions over the many years to the culture and the way we structure our company and motivate people and that’s not going to change,” Walker said told a conference call with financial analysts.
Stronach said that as honorary chairman he would “always be available to provide any guidance that management or the board requires.”
Under an earlier agreement approved by shareholders that saw Stronach give up control of the company, the founder became a consultant with Magna and earns a percentage of the company’s profits.
The payments are being gradually phased out and will be eliminated at the end of 2014.
Magna earned US$390 million, or $1.66 per diluted share in the three months ended Sept. 30, up from US$102 million or 42 cents a share in the same quarter a year ago.
Sales totalled US$7.41 billion, up from $6.97 billion in the year-ago quarter.
The profits were boosted by a revaluation of the company’s E-Car business after Magna acquired the remaining 23 per cent stake in the company owned by the Stronach Group in August for $75 million.
The change added $125 million or 53 cents per share to Magna’s earnings for the most recent quarter, while a year ago the company took a $124 million hit in one-time charges related to the sale of a plant in Germany and a patent settlement that shaved 52 cents off its earnings.
Magna has 305 manufacturing operations and 88 product development, engineering and sales centres offering everything from auto parts production to full vehicle assembly.