BorgWarner Inc. (BWA) expects that it will be able to sustain its 2000−2009 compound annual sales growth of 45% till at least 2014 in China . This was driven by the government’s policy aimed at promoting the automotive sector.
In 2009, China’s auto sales surpassed that of U.S. by growing 45% to 13.6 million units, driven by government incentives such as sales tax and interest rate cuts as well as subsidies to trade in older cars. A faster economic recovery has also helped the world’s biggest auto market to uphold its position. Sales in the U.S. fell 21% to 10.4 million vehicles in 2009, which was a 27-year low.
BorgWarner generates about 12% of its global sales in China. The company expects the ratio to go up to 15% by 2014, about half of its expected sales in Asia . Asia contributed 23% of the company’s global sales in 2009.
BorgWarner has an ever-growing clientele in China in addition to its global clients such as General Motors, Ford Motor (F) and Volkswagen AG. Its clientele in China includes SAI C Motor Corp, FAW Group and Chery Automobile.
BorgWarner reported a profit of 42 cents per share (before special items) in the fourth quarter of 2009 compared to a breakeven result 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.
The automotive components manufacturer 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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