UPDATE 3-Wabco Q2 tops view; raises FY 2010 outlook

* Q2 adj EPS $0.63 vs est $0.52

* Q2 revenue up 62 pct

* Raises 2010 EPS view

* Raises 2010 sales view (Adds conference call comments, updates share movement)

BANGALORE, July 28 (Reuters) - Auto parts maker Wabco Holdings Inc (WBC.N) posted quarterly results beating Wall Street expectations, helped by the recovery in the commercial vehicle industry, and raised its 2010 outlook, citing better market developments.

For the full year, Wabco raised its adjusted earnings forecast to $1.95 a share to $2.20 a share, up from earlier forecast of $1.75 a share to $2.05 a share.

Including the impact of a European Commission fine, the company expects a loss of $4.11 a share to $4.36 a share, down from prior view of $4.24 to $4.55 a share.

The company, whose key customers include Daimler AG (DAIGn.DE), ArvinMeritor Inc ARM.N and Fiat SpA (FIA.MI), now sees sales growth of 35 percent to 40 percent in local currencies, up from its prior view of an increase of 30 percent to 35 percent.

Analysts on average expect the company to earn $1.95 a share, before special items, on revenue of $1.92 billion, according to Thomson Reuters I/B/E/S.

"We think these results will allow the stock to hold the last month's gains. However, these results are clearly enough for the Street to raise 2010 earning per share again, likely to the high end," J.P. Morgan wrote in a note to clients.

The company said it achieved an incremental gross profit margin of 40 percent this quarter while delivering an incremental operating profit margin of 28 percent.

"Markets that we serve around the world continue to develop favorably," CEO Jacques Esculier said, adding that Wabco also raised its full-year outlook for performance operating margin to range from 8.5 percent to 9.5 percent, up from its previous guidance of 8 percent to 9 percent.

"This quarter, for the first time in two years, every region of the world showed year-on-year growth in truck and bus production," the CEO said.

He added that each region grew by 50 percent or more, except North America, which grew by 12 percent.

However, the company said it saw a strong recovery in freight demand in North America, and said it continues to anticipate significant market growth in 2011.

In Europe, truck and bus production expanded 73 percent for the quarter, the company said on a conference call, adding that there is scope for continuous growth in this region.

Wabco said it still sees a slowdown in manufacturing of commercial vehicles in China during the second half of 2010.

The company reaffirmed that it expects to convert between 80 percent to 90 percent of its net income into free cash flow, excluding the European Commission fine indemnification and other payments.

Q2 TOPS STREET

For the second quarter, the company reported net loss of $365.4 million, or $5.68 a share, compared with a loss of $17.4 million, or 27 cents a share, a year ago.

Excluding certain items, performance net income was 63 cents a share.

The company, which also supplies safety and control systems for commercial vehicles, saw a 62 percent jump in revenue at $512.3 million.

Analysts were expecting the company to earn 52 cents a share, before special items, on revenue of $494.5 million.

"The beat was top-line driven with 28 percent incremental margins in line with our model," J.P. Morgan said.

The quarter's results were hurt by a previously announced European Commission fine of $400.4 million.

"At last, the long delayed decision by the European Commission is behind us, and now more than ever, we can leverage the full power of our business," the CEO added.

Shares of the company were trading up 10 cents at $38.19 Wednesday on the New York Stock Exchange. (Reporting by Fareha Khan in Bangalore; Editing by Don Sebastian)