DETROIT Feb 13 BorgWarner Inc, which
makes automotive turbochargers and emissions systems, posted a
higher-than-expected quarterly profit on Thursday on strong
demand for all-wheel drive systems, dual clutch transmission
modules and other parts in its drivetrain business.
The auto parts maker, whose shares rose 1.5 percent in
morning trading, also reiterated the full-year profit outlook it
provided last month, although Morgan Stanley analyst Ravi
Shanker called the margin forecast very conservative.
"The bad news in the results was the ongoing softness in the
core engine business," Shanker said in a research note. "The
good news was the continued strength of drivetrain."
The Auburn Hills, Michigan-based company is one of the
biggest suppliers of turbocharging technology, which automakers
have been using to boost fuel economy and meet upcoming federal
standards for mileage.
Net income in the fourth quarter rose nearly 17 percent to
$141.4 million, or 62 cents a share, from $121.2 million, or 51
cents a share, a year earlier.
Excluding restructuring charges and other one-time items,
BorgWarner earned 79 cents a share, 8 cents more than analysts
polled by Thomson Reuters I/B/E/S had expected.
Analysts credited some of the earnings beat to a
lower-than-expected tax rate as well as low-than-anticipated
corporate expenses. Guggenheim Securities analyst Matthew Stover
estimated those two factors had aided the bottom line by a
combined 5 cents a share.
Revenue rose 10 percent to $1.89 billion. Analysts had
expected $1.9 billion.
In the company's engine segment, adjusted earnings rose 14
percent to $208 million, below expectations of $224 million by
Morgan Stanley's Shanker. But the drivetrain segment's profit
jumped 43 percent to $71 million, exceeding his estimate of $59
BorgWarner affirmed its 2014 outlook, saying it still
expected to earn $3.10 to $3.25 a share. Analysts forecast
As part of that outlook, the company expects net sales
growth of 7 percent to 11 percent from 2013, excluding
acquisitions, and operating income margins of 12.5 percent or
BorgWarner's 2013 margins were 12.4 percent, according to
The 2014 outlook excludes the impact of the pending
acquisition of Gustav Wahler. In December, BorgWarner said it
would acquire the German maker of exhaust gas recirculation
valves, tubes and thermostats in the first quarter for an
Shares of BorgWarner were up 85 cents at $56.29 in morning
trading on the New York Stock Exchange.