UPDATE 2-BorgWarner cuts 2012 outlook on global slowdown

Thu Jul 26, 2012 11:11am EDT

DETROIT, July 26 (Reuters) - BorgWarner Inc, a supplier of automotive powertrain technology, reported lower net income for the second quarter and cut its full-year earnings and revenue outlook, citing the slowdown in the global economy.

Excluding one-time items, BorgWarner earned $1.36 per share. This fell a penny short of the average Wall Street estimate of $1.37, according to Thomson Reuters I/B/E/S.

The decline of the euro against the dollar during the quarter cost BorgWarner 9 cents a share and lowered sales by $135 million. Last year, Europe accounted for more than half of total revenue.

"Our outlook for Europe and for commercial vehicle markets around the world has been negatively impacted by the general slowdown in the global economy," Chief Executive Tim Manganello said in a statement.

The parts supplier now expects to earn between $5.05 and $5.25 per share this year, down from its previous outlook of between $5.35 and $5.65. Wall Street analysts, on average, expect $5.38 a share this year.

BorgWarner also expects 2012 revenue to increase by 4 to 6 percent, including the effect of currency. Earlier, it projected as much as 12 percent growth in sales. Analysts, on average, expect annual revenue to be about $7.8 billion, roughly a 9 percent rise from 2011 levels.

The new revenue outlook is "a legitimate disappointment," said Citi analyst Itay Michaeli.

"The slowdown in revenue growth was worse than expected, overshadowing strong margin performance in the quarter," Michaeli said.

The company reported net income fell to $121 million, or $1 per share, from $162 million, or $1.31 per share.

BorgWarner shares were up 6 cents at $62.19 on Thursday morning on the New York Stock Exchange.

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