Q4 2016 Real-Time Call Brief

Highlights

In the fourth quarter of 2016, we recorded restructuring charges related to a European Powertrain facility.

This reduced operating income and net income attributable to Magna each by $17 million and EPS by $0.05.

In addition during the fourth quarter of ‘16, we recognized a $13 million non-cash charge related to a pension settlement.

This reduced operating income by $13 million, net income attributable to Magna by $9 million and EPS by $0.02.

In the fourth quarter of 2016, we reported restructuring charges related to our European exteriors and rooms systems businesses.

These reduced operating income and net attributable to Magna by $15 million each and EPS by $0.03.

Magna started preparation for significant launches over the next few years and 10% increase in our dividend In 2016 total sales grew 13% over 2015.

Our organic sales growth, excluding net acquisitions and adjustment for movements and foreign exchange rates, was 7% in 2016.

This compares to about 4% growth for global light vehicle production.

So our global organic sales outperformed global vehicle production by 3% in 2016.

Similarly North American production sales grew 7% organically excluding acquisitions acquisitions and foreign exchange movements.

This compares to about 10% growth for North American light vehicle production, which represents 5% outperformance compared to the market.

European production sales grew 8% organically compared to about 2% growth to European light vehicle production.

This represents 6% outperformance compared to the market.

Asian production sales grew 26% organically compared 6% for Asian production.

This represents 20% outperformance, more than three times the growth in the Asian market.

Including unconsolidated sales, our Powertrain Group should reach approximately $10 billion of sales by 2018.

By 2019 we expect assembly sales to be between $6.6 billion and $7.1 billion compared to $2.2 billion last year.

In 2016, we had a record year for sales, up 13% to $36.4 billion.

Adjusted EBIT margin improved to 8% despite the negative impact from the acquisition of Getrag.

Adjusted EPS increased 16% to record $5.23 per share.

Cash flow from operations was a record $3.4 billion and we repurchased 22.6 million shares, returning $1.3 billion to shareholders in buybacks and dividends.

In the fourth quarter, our consolidated sales increased 8% or $685 million relative to the fourth quarter of 2015, to a fourth quarter record of $9.3 billion.

Reported North American production sales increased 4% in the fourth quarter to $4.9 billion.

North American vehicle production decreased 4% to 4.4 million units.

Reported European production sales increased 20% from the comparable quarter to $2.2 billion, a fourth quarter record, while European vehicle production declined 4% to 5.3 million units.

Asian production sales increased 40% or $190 million from the comparable quarter to $663 million, an all time quarterly record for Asia.

Rest of world production sales increased 53% or $46 million to $133 million for the fourth quarter.

Complete vehicle assembly volumes declined 70% from the comparable quarter and assembly sales declined only 30% to $439 million.

In summary, consolidated sales excluding tooling, engineering, and other sales, increased approximately 8% to $627 million in the fourth quarter.

Tooling, engineering, and other sales, increased 7% or $58 million from the comparable quarter to $936 million.

As anticipated the adjusted EBIT margin this quarter decreased to 7.5% from 7.7% from the fourth quarter of 2015.

Interest expense increased $3 million to $20 million in the fourth quarter of 2015, largely related to the increase in debt associated with the purchase of Getrag.

In Q4 2016, our effective tax rate was 22.8% compared to 22.2% in Q4 2015.

Diluted earnings per share from continuing operations was $1.31 a Q4 record compared to $1.22 in Q4 2015.

During the fourth quarter of 2016, we generated $878 million of cash from operations prior to changes and non-cash operating assets and liabilities.

We also generated an additional $480 million in non-cash operating assets and liabilities For the quarter investment activities amounted to $934 million including $662 million fixed assets and a $155 million increase in assets and other assets as well as $117 million for acquisitions including bolt-on.

In addition, we repurchased 2.7 million common shares for $114 million and paid $95 million dividends in the fourth quarter.

We also announced today a 10% increase in our quarterly dividend to $27.5 per share.

Our balance sheet remains strong with $974 million in cash as of December 31, 2016 and additional $2.1 billion in unused available credit.