* Pays first dividend since 2009
* 2013 earnings forecast raised
* Buys back 6 mln shares in last 5 quarters
* Operating profit margin 12.9 pct in Q2
By Bernie Woodall
July 25 BorgWarner Inc, maker of
automotive turbochargers and emission systems, posted
higher-than-expected profit on Thursday as global demand for
more fuel-efficient vehicles continued to rise in the second
Borg Warner boosted its earnings forecast for 2013 to a
range of $5.40 to $5.55 per share from a previous range of $5.15
"Right now, auto manufacturers are wanting higher fuel
economy, and BorgWarner's technology is helping them do that,"
said analyst Richard Hilgert of Morningstar.
It earned $1.50 a share, beating analysts' expectations of
$1.40, according to Thomson Reuters I/B/E/S.
Analyst Ravi Shanker of Morgan Stanley said BorgWarner is
making a strong showing in Europe, where its margins were 13
percent in the quarter despite weak automotive sales.
Its overall operating margin was 12.9 percent in the
quarter, a company record.
The company, based in suburban Detroit, announced a
quarterly cash dividend of 25 cents per share for its common
stock. This is the first dividend since it suspended payouts in
early 2009, at the height of the automotive industry crisis.
In 2007, BorgWarner paid a dividend of 85 cents per share in
Shanker said the dividend "is not particularly large but
allows BorgWarner to check that box and satisfy investors
looking for cash return while the growth story continues."
BorgWarner narrowed its annual net sales growth projection
to between 3 percent and 5 percent from between 2 percent and 6
Quarterly net earnings rose to $142 million, or $1.50 per
share, from $121 million, or $1.00 per share, in the
year-earlier period. Excluding one-time items, last year's
second quarter earnings were $1.36 per share.
The company repurchased about $100 million worth of its
shares in the quarter.
Chief Financial Officer Ronald T. Hundzinski said on a
conference call with analysts that the company's priority for
spending was "strategic" acquisitions, after capital
expenditures and paying a dividend.
"However, in the absence of a deal, repurchasing shares
remains an option for us and we have repurchased over 6 million
shares in the last five quarters," Hundzinski said.
Joseph Spak of RBC Capital Markets said, "We don't believe
(the dividend) will preclude BorgWarner from pursuing merger and
Sales totaled $1.89 billion, compared with $1.86 billion a
year ago. Analysts expected $1.92 billion.
BorgWarner shares dipped 3 cents at $92.14.