BorgWarner Inc. (BWA) has expanded its Asian operations by opening up facilities in China and India. Last week, the manufacturer of powertrain applications unfolded a technical center in the Zizhu Science Park in Shanghai.
The Shanghai center will undertake research and development of engines and drivetrains. It is expected to be the largest in the company’s network of global technical centers within 2 years and will employ 400 workers.
BorgWarner is optimistic about its operations in China. It already operates manufacturing, assembly and technical facilities in Beijing, Ningbo and Shanghai. Recently, the company has revealed that it will be able to sustain its 2000−2009 compounded annual sales growth of 45% until at least 2014 in China, driven by the nation’s government policy aimed at promoting the automotive sector.
BorgWarner generates about 12% of its global sales in China. The company expects the ratio to go up to 15% by 2014, with about half of its expected sales in Asia. BorgWarner’s clientele in China includes SAIC Motor Corp, FAW Group and Chery Automobile.
Recently, BorgWarner has also opened a new manufacturing facility near Chennai, India. The facility will manufacture thermal system products (a part of the company’s Engine segment) such as viscous fans and fan drives for customers including Tata Motors (TTM), Tata Cummins, Ashok Leyland, Mahindra & Mahindra and others. The company also operates manufacturing, assembly and technical facilities in Chennai and Pune.
BorgWarner posted a profit of 42 cents per share (before special items) in the fourth quarter of 2009 compared with breakeven results in the prior-year quarter. The profit was double the Zacks Consensus Estimate of 21 cents per share and was driven by the sales growth and the lean cost structure of the company.
BorgWarner anticipates sales to grow 15%–19% in 2010, while earnings are expected in the range of $1.40–$1.70 per share. A recovery in North America along with a strong growth in the Asian businesses driven by higher production levels and new program launches in China, India, Korea and Japan are expected to drive growth for the company.
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