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UPDATE 2-Magna profit jumps as vehicle output picks up; div boosted

Toronto, March 3 (Reuters) - Magna International Inc , one of the world's largest auto parts suppliers, said on Monday that quarterly profit jumped 31 percent, driven by a pickup in North America and Europe, and hiked its dividend.

Shares climbed more than 4 percent to a record as profit topped expectations.

Magna also trimmed the 2014 sales forecast for its core vehicle parts business due to a weakening Canadian dollar relative to the U.S. dollar, but maintained its total sales outlook.

"Overall we're pleased with Magna's performance in the fourth quarter," Chief Executive Officer Don Walker told analysts on a conference call. "And we anticipate ongoing strong results in North America in 2014."

The Aurora, Ontario-based company sees sales in the range of $28.4 billion to $29.7 billion for its parts business, slightly lower than the $28.6 billion-$29.9 billion it forecast in January.

Magna, which also manufactures complete vehicles on a contract basis, raised its sales forecast for the unit to $2.8 billion to $3.1 billion from $2.6 billion to $2.9 billion.

"SALES BEAT"

Magna, which has 316 plants in 29 countries, said consolidated fourth-quarter sales increased 14 percent to $9.2 billion from the same period in 2012. Analysts, on average, expected revenue of $8.87 billion.

"The sales beat was largely on North American content per vehicle and European industry volumes," Canaccord Genuity analyst David Tyerman said in a client note. "North American and European margins also beat our expectations substantially."

North American production sales rose 13 percent due in part to a 6 percent gain in vehicle production. Margins increased due to a higher percentage of production sales, and a lower amount of tooling sales, which have margins close to zero, executives told analysts.

European production sales climbed 17 percent due in part to a 5 percent rise in vehicle production in Europe.

Production sales in Asia, including China, Japan, Korea, India and Thailand, jumped 29 percent. Production sales fell 11 percent for the rest of the world, which is made up primarily of the South American market.

Magna has been turning around its European operations to improve efficiency amid a slow recovery in the region. It expects most of the work to be done this year, with some spillover into 2015. In South America, it has struggled to pass on rising costs due to inflation on to customers.

"We have reached some recent agreements with our customers which should reduce the losses this year and further discussions with our customers on these matters are ongoing," said Walker.

Net income attributable to the company rose to $458 million, or $2.03 per share, in the fourth quarter, from $351 million, or $1.49 per share, a year earlier.

Analysts, on average, expected earnings per share of $1.54.

Quarterly adjusted income from operations before interest and taxes (EBIT) jumped 57 percent to $607 million from $387 million.

Magna raised its quarterly dividend to 38 cents per share from 32 cents per share, payable on March 28 to shareholders of record March 14.

The stock was up 4.1 percent at C$102.63 in Toronto and 4 percent at $92.70 in New York, in mid-day trading.

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