DETROIT, April 25 BorgWarner Inc, which
makes automotive turbochargers and emissions systems, posted
higher-than-expected operating profit on Thursday as both of its
businesses topped forecasts, and the company reaffirmed its
full-year financial outlook.
"The focus on fuel economy and improved emissions continued
to drive growth for BorgWarner in most parts of the world, but
sharp declines in light vehicle production in Europe, a market
that comprises nearly half of our sales, more than offset this
growth," Chief Executive James Verrier said in a statement.
Morgan Stanley analyst Ravi Shanker said investors would
likely be relieved by the full-year outlook, given the weakness
in Europe, where industry vehicle production in the first
quarter fell 9 percent.
Shanker also cited the auto supplier's strong operating
margin of 11.7 percent. Those positives "should leave Borg with
a lot of room to beat modest consensus expectations as the
production rate steps up and (comparisons) get easier in the
back half of the year," he said in a research note.
Net earnings in the first quarter attributable to the
company declined to $142 million, or $1.22 a share, from $163
million, or $1.28 a share, a year earlier.
Excluding one-time items, BorgWarner earned $1.30 a share, 6
cents better than the average forecast of analysts polled by
Thomson Reuters I/B/E/S. Foreign exchange reduced earnings by 3
cents a share, and Shanker said a lower-than-expected share
count aided the outperformance by 2 cents.
Sales fell 3 percent to $1.85 billion due to sharp
production declines in Europe. Analysts had expected $1.83
billion. Excluding the impact of foreign currencies and
dispositions, sales fell 1 percent.
Sales in the company's engine group business were down 3.8
percent to $1.26 billion, while operating income declined by
about the same rate to $202 million. However, both of those
results were above what Shanker had forecast.
The drivetrain group's sales of $601 million came up short
of Shanker's estimate, but the $56 million operating income
BorgWarner said its outlook for the year is unchanged. It
still expects sales to grow 2 percent to 6 percent, while net
earnings per share, excluding one-time items, should be $5.15 to
$5.45. Analysts have been expecting full-year sales of $7.46
billion and earnings of $5.29 a share.
The Auburn Hills, Michigan-based company is one of the
biggest suppliers of turbocharging technology, which has been
increasingly used by automakers, including Ford Motor Co
and Hyundai Motor Co, to boost fuel economy and meet
upcoming federal standards for fuel mileage.
BorgWarner shares were up 2 percent at $76.68 in morning
trading on the New York Stock Exchange.