Magna International Inc Q2 2021 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Aileen Elizabeth Smith - BofA Securities, Research Division - Analyst : This is Aileen Smith on for John. I wanted to follow up first on the commentary around the decremental margins, specifically as it relates to the outlook in the second half of the year. I think you referenced 19% in the second quarter. If we're looking at the front half of last year, that was incredibly pressured. I think, one, you put up a (inaudible) decremental in 2Q, which was -- the worst of it is 22% decremental. As you think about the cadence that you're looking towards in the second half of the year, how do you think about further containing decrementals, if that's possible at all, specifically with a commodities environment that's going to be less favorable?

Question: Aileen Elizabeth Smith - BofA Securities, Research Division - Analyst : Yes, not relative to your own assumptions, but internally, as you think about decrementals in the second half of the year, your own internal expectations, are there ways from a cost perspective that you could further try to contain the decrementals versus the relatively impressive performance that you've already put up in some pressure periods?

Question: Aileen Elizabeth Smith - BofA Securities, Research Division - Analyst : Okay. That's helpful. And then I wanted to ask a bigger picture question around strategy and not specifically referencing Veoneer but sort of related to it. As we think about the outlook or, I guess, the thought process as we head into 2022, whether or not the Veoneer acquisition ultimately goes the way you anticipate or not. But presuming it doesn't, how does that change in any way your focus from a strategic perspective around what technology do you think you may need access to, to accelerate the growth trajectory? Is there still a hyperfocus on ADAS, AV? Or separately, could you look at other areas within the portfolio, whether it's powertrain or electrification, and try to get more aggressive there?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : With the -- first, on the semiconductor shortage. So as these -- I particularly think as the GM trucks, I think, are going to be having more downtime over the next couple of weeks, I'm just wondering like how do your plans react to it? So I believe you have that plant near London, Ontario that REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2021 / 11:00AM, MG.TO - Q2 2021 Magna International Inc Earnings Call does frames for GM truck. So like do you take the plants down and send the employees home? Or you reduce shifts? Or how does Magna react to this volatility that we're seeing in the production schedules for your primary platforms?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Okay. And then Swamy, my last question. I'm just wondering if you could elaborate a little bit more on the LG joint venture. When do you expect to be delivering products? Which customers you're targeting? And I know you'll be doing electric drives there, but there are other areas within Magna that will be doing electric drives. So is it that the LG joint venture is positioned more for Asian customers and won't be addressing the North American and European markets? I'm just wondering how you're carving up this e-powertrain market? Because you seem to have a number of areas of expertise that will be pursuing that product category.

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : And what assets are there in the joint venture now? Has LG contributed like facilities that are up and running now? Or what is the status and what needs to be built?