Magna Outlook Upgraded to Stable on Cash Flow

S&P Global Ratings Outlook Revision for Magna International Inc.

S&P Global Ratings revised its outlook on Magna International Inc. to stable from negative on 9 July 2026, while affirming the company’s A‑ long‑term issuer credit rating and A‑ issue‑level rating on its unsecured debt. The agency cited three primary drivers for the upgrade: margin expansion, stronger cash‑flow generation, and debt reduction that exceeded its expectations.

The ratings agency forecasts that Magna will maintain an adjusted debt‑to‑EBITDA ratio below 1.5× and an adjusted free operating cash‑flow‑to‑debt ratio above 30 % over the next several years. As of 31 March 2026, Magna’s gross leverage stood at 1.5×, with modest deleveraging anticipated as EBITDA is expected to grow 2 %–5 % annually.

Magna’s adjusted EBITDA margin is projected to increase to about 11 % over the next couple of years, up from 10.2 % in 2025, representing a 170‑basis‑point improvement relative to 2023. The agency attributes this margin uplift to organic growth in higher‑margin segments, operational‑excellence initiatives, lower net engineering spending, and reduced restructuring costs.

Free operating cash‑flow generation is projected at $1.8 billion‑$1.9 billion annually for the coming years, equivalent to 30 %‑33 % of adjusted debt. The forecast assumes capital expenditures of 3.8 %‑4.0 % of revenue and notes that there will be no additional commercial battery electric‑vehicle recoveries this year, after Magna received more than $450 million during the first quarter of 2026.

The agency also expects Magna to increase share repurchases to $1.0 billion‑$1.3 billion per year through 2028, following three years of limited buybacks. Magna remains the largest tier‑1 automotive supplier in North America and the third largest globally, with exposure to electrification, autonomous driving, and connectivity.

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