Diversification away from Europe starts to have an effect on balance sheets

Major suppliers are reporting strong second quarter results as the budding recovery in the North American and Asian markets start to take hold. In addition, supplier’s that have made moves away from the still weak European markets are now seeing the benefit. 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 reported 2% y/y increase in net sales to USD1.9bn compared with USD1.8bn during the second quarter 2012. 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. 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.

3M reported net income of USD1.2bn in the third quarter ended on 30 June 2013 compared with USD1.16bn in the corresponding period a year ago.  Sales increased 2.9% year-on-year (y/y) to USD7.8bn, thanks to acquisitions which added 1.9% to top line, and organic local currency sales grew 2.3%.

Gentex reported a 28% year-on-year (y/y) increase in net income to USD52.1m in the second quarter (Q2) ended 30 June 2013 compared to income of USD40.8m recorded in the same period of the previous year. Gentex expects its net sales to increase 3% y/y in Q3 2013 compared to the same period of the previous year. The company expects the light vehicle production in North America to go up by 8% y/y in Q3 2013 along with 3% decrease in Europe and 4% increase in Japan and Korea during the same period compared to last year. For complete FY2013, the light vehicle production is expected to go up 5% in North America with Europe and Japan and Korea witnessing 3% and 5% decline in the same respectively.

Plastic Omnium has reported a 6.4% year-on-year (y/y) increase in net profit to EUR104.3m (USD135.6m, 30 June 2013) in the first half (H1) ended 30 June 2013 compared with EUR98m (USD123.2m, 30 June 2013) in the corresponding period a year ago. The revenue growth was led by the company’s Automotive business segment which recorded an 8.2% y/y increase in sales to EUR2.34bn (USD3bn). To mitigate the impact of the slowdown in the European market, Plastic Omnium took measures to slash production costs and overheads, particularly in western Europe. These included the closure of automotive exterior plants in Eisenach (Germany), Herentals (Belgium) on 1 August this year. The production from these plants will be relocated to the company’s other plants in Europe.

Autoliv recorded a 9.7% year-on-year (y/y) increase in its net income to USD138.7m in the second-quarter (Q2) ended 30 June compared with USD126.4m in the same period a year ago. Net sales went up 5.2% y/y to USD2.1bn from USD2bn. Operating income increased 1.8% to USD194m from USD190.4m for the period.

Honeywell has reported a 13.2% year-on year (y/y) increase in net income to USD1bn in the second quarter ended 30 June 2013 compared with USD902m during the same period a year ago.The better than expected performance during the first half has led Honeywell to raise its full year outlook. Under revised forecasts, the company expects sales in the range of USD38.9bn to USD39.3bn compared with USD38.8bn to USD39.3bn projected earlier.

Johnson Controls has reported a 32.5% year-over-year (y/y) increase in net income to USD571m in the third quarter ended 30 June 2013 compared with USD431m during the same period a year ago. Sales increased 2.4% y/y from USD10.6bn to USD10.8bn. Johnson Controls registered significant growth in third quarter driven by strong performance in its Automotive Experience and Power Solutions businesses. During the third quarter, the Automotive Experience segment recorded income of USD11m in Europe against loss in the second quarter, despite ongoing sluggish demand in European automotive market.

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