MESSAGE FROM OUR CHIEF EXECUTIVE OFFICER
Strategy in Motion:
Continued Growth Over Market and Improved Earnings
I am pleased to present Magna’s 2023 annual report, highlighting our achievements, challenges, and future opportunities. As I reflect on the past year, it is evident that Magna has continued to thrive and adapt in a rapidly changing automotive industry.
The goal of delivering a sustainable, safer, and more accessible future for all who share the road steers our business decisions as we continue to create value for our stakeholders.
We are building momentum by further innovating, delivering operational excellence, and solving challenges for the industry in key megatrend areas of electrification and active safety. We are optimistic about the future as we continue to invest for growth and navigate one of the most complex industries, establishing leadership in high-tech product categories that will be fundamental to future vehicles.
Swamy Kotagiri
Chief Executive Officer
A hallmark of Magna continues to be a strong financial foundation, including a solid balance sheet and our disciplined capital allocation strategy has remained consistent. In 2023, we remained focused on identifying product gaps and growth opportunities, while we continued to shift our portfolio through both M&A and internal investments. Looking ahead, we expect capital spending as a percent of sales to decline, as planned, and our cash generation profile to significantly improve from 2023 levels.
Go-Forward Strategy
We continue to execute our Go-Forward strategy, which gives us confidence in our outlook for growth and margin expansion. This strategy includes accelerating the deployment of capital towards high-growth areas, driving operational excellence, and unlocking new business models and markets.
Portfolio and Capabilities
Our ecosystem of interconnected products and complete vehicle expertise enables us to deliver unique system solutions and position ourselves at the forefront of the industry’s shift towards software-defined vehicles. We believe this integrated systems approach aligns with how OEMs will design, source, and manufacture in the future. Most importantly, this approach gives us a competitive advantage and enables us to generate strong returns and grow in this rapidly evolving landscape.
In addition, our ability to continue to outgrow vehicle production and win significant new business confirms the strength of our portfolio and our capabilities.
We continue to take a selective, measured, and thoughtful approach to the programs in which we invest, to help mitigate volume risk.
Following the acquisition of Veoneer Active Safety, our active safety business is well on its way to becoming an industry leader with a comprehensive portfolio, leading market positions and a global presence, with more than 2,600 systems and software engineers.
We are building momentum by further innovating, delivering operational excellence, and solving challenges for the industry in key megatrend areas of electrification and active safety. We are optimistic about the future as we continue to invest for growth and navigate one of the most complex industries, establishing leadership in high-tech product categories that will be fundamental to future vehicles.
Swamy Kotagiri, Magna CEO
Operational Excellence
We are among the industry leaders in annual product launches and shipped roughly two billion components and systems from our facilities in 2023.
To help mitigate short- and mid-term macroeconomic pressures, we implemented various actions, including consolidation, restructuring, and cost containment activities across the company. We also engaged in ongoing commercial negotiations with customers to recover costs, transitioned to various pricing models based on industry benchmarks, and addressed pricing challenges.
These actions have already yielded benefits, helping offset 2023 headwinds and contributed to solid earnings growth. Simultaneously, we are intensifying efforts in core areas of our business and adopting advanced technologies to enhance long-term productivity. These efforts encompass automation, smart manufacturing activities, and enterprise-wide global purchasing initiatives.
New Mobility
With a methodical approach focused on leveraging our core expertise, Magna is poised to take advantage of near- and long-term opportunities beyond the traditional supply and manufacture of vehicles. We are focused on creating value by participating in new business models within specific market segments. These include autonomous mobile robots (AMR), which can be leveraged in manufacturing and last-mile delivery applications, which is expected to grow to about four times what the market is today.
Optimistic about 2024
With the plans we are executing, we believe we are poised to continue to outgrow the market, expand margins over time, generate strong returns on our investments and further shift our portfolio toward the Car of the Future.
We are well-positioned for the tremendous opportunities in the coming years as the industry transforms. I am confident that Magna will generate sustainable value in the long run, as we lead in the evolving mobility landscape.
I thank all of our stakeholders for their continued support of our vision and mission.
Sincerely,
Swamy Kotagiri
Chief Executive Officer