Raises full year 2013 outlook

BorgWarner has reported a 44.4% year-on-year (y/y) increase in net income to USD174.1m in the second quarter ended 30 June 2013 compared with USD121.4m during the same period a year ago, the company said in a press release. The company reported 2% y/y increase in net sales to USD1.9bn compared with USD1.8bn during the second quarter 2012. Sales increased 3% y/y excluding favourable impact of foreign exchange translations. Higher sales helped the company to record 25.8% y/y increase in operating income from USD193.5m to USD243.4m.  

The Engine Group reported a 1.4% y/y increase in sales to USD1.3bn. Excluding favourable currency impact, sales increased by 4% y/y driven by higher sales of turbochargers, EGR coolers and engine timing systems in China. The segment reported adjusted EBIT of USD220m, up 5% y/y over USD211m in Q2 2012.

The Drivetrain Group reported 3.4% y/y increase in sales to USD614m. Sales increased by 2% excluding foreign exchange translations driven by higher sales of ail wheel drive systems in North America. The segment recorded adjusted EBIT of USD60m, up 10% y/y over USD55m in Q2 2O12.

In the first six months of 2012, BorgWarner reported a marginal decline in sales of 0.6% y/y to USD3.7bn compared with USD3.8bn during the same period a year ago. Despite decline in sales, the company recorded a 5.4% y/y increase in operating income from USD419.1m to USD441.9m. BorgWarner concluded the first half with net income of USD316.1m, up 11.1% y/y to USD284.4m.

The Engine Group reported sales declined marginally by 1.2% y/y to USD2.5bn. Despite lower sales, the segment reported marginal increase in Adjusted EBIT of 0.5% to USD422.6m. The Drivetrain Group’s sales remained flat at USD1.2bn. The segment also reported no change in adjusted EBIT at USD115.8m.

“Outstanding performance by our operations drove our strong second quarter results,” said James Verrier, President and CEO of BorgWarner. “The focus on fuel economy and improved emissions continued to drive growth for BorgWarner around the world.”

Significance: BorgWarner recorded strong growth in sales and earnings during the second quarter after its performance came under pressure in the first quarter. The company continues to win new orders in both engine and drivetrain groups across the key automotive markets. During the second quarter, the company started supplying turbocharger technology for Hyundai 1.6L turbocharged gasoline direct (T-GDI) engines. This month the company commenced supplying EGR cooler for Renault 1.6 L diesel engines and DualTronic control modules and clutch modules for SAIC’s six-speed wet dual-clutch transmission (DCT). The company is also expanding presence in key automotive markets. During the second quarter BorgWarner opened a new production facility and engineering centre in Itatiba city (Brazil). At the beginning of this year the company opened a new emission systems plant in Manesar, near Gurgaon, Haryana (India). The plant produces EGR coolers, tubes, valves and modules for its automotive customers in India.

The strong performance in the second quarter has led BorgWarner to change its full year 2013 financial outlook. The company forecasts operating income as percentage of sales to be 12% excluding non-comparable items, up from 11.5% earlier. BorgWarner forecasts net sales to grow in the range of 3% to 5% compared with 2% to 6% forecast earlier.  
 

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