When the coronavirus crisis struck, executives at Magna International were more prepared than most to handle the unexpected. As a regular planning exercise, senior leadership runs through its contingency plans for an unexpected downturn.
“It’s not until it really happens that you have to work through it, but I think it gets people thinking about it,” CFO Vince Galifi told Automotive News.
As the pandemic struck the United States, Galifi said the company’s balance sheet remained strong. Magna CEO Don Walker said investors “should take comfort” in the fact the company had approximately $1 billion in cash and $3 billion available in committed credit lines.
On Thursday, May 7, Magna reported first-quarter sales of $8.7 billion, an 18 percent drop from $10.6 billion in the first quarter of 2019. The company estimated COVID- 19 cost it $1.1 billion on sales overall.
The company says its operations in China have largely resumed, while facilities in Europe and North America are expected to return to production in stages over the next few weeks.
“Given the magnitude of the expected declines in, and uncertainty regarding, future vehicle production, we have been taking prudent actions across the company to reduce costs and conserve cash, including stopping share repurchases,” Galifi said.
Meanwhile, Magna has been fighting COVID-19 on several fronts. The company has supplied parts for three different ventilator projects, including the one General Motors has underway with Ventec Life Systems.
A design team based in Michigan that’s typically focused on car seats has applied its sewing skills to making thousands of face masks. Separately, Magna secured more than a half-million face masks in China for distribution to hospitals in North America and Italy.
Magna has developed health protocols for when factories reopen that mandate all individuals entering its centers do daily at-home temperature checks. The company’s guidance also includes the isolation of employees in designated rooms should they fall ill at work and that anyone in close contact with sick employees be sent home.