BorgWarner Inc. (BWA) has revealed a profit of 65 cents per share (before special items) in the first quarter of 2010, ahead of the Zacks Consensus Estimate of 42 cents per share. The profit showed a significant improvement from a loss of 12 cents per share in the prior-year quarter, driven by growing demand for fuel-efficient technologies products such as dual clutch transmission system and the recovery in the global markets, especially in Asia.

Operating income improved to $106.6 million or 8.3% of sales from a meager $5.5 million or 1% of sales. Consolidated sales rose a robust 57% to $1.29 billion.

Sales in the Engine segment went up 45.1% to $906 million due to strong sales growth in all the products. Excluding the impact of currency, sales were up 38%. Sales in the Drivetrain segment shot up 94.7% to $385.8 million, driven by higher sales of transmission components and torque management devices in Europe, Asia and the U.S. Excluding the impact of currency, the increase was 87%.

Financial Position

BorgWarner had cash amounting to $374.1 million as of March 31, 2010. Long-term debt was $774 million as of that date. Long-term debt to capitalization ratio stood at 26%.

In the quarter, cash flow from operating activities declined to $64.1 million from $68 million in the prior-year quarter due to unfavorable changes in assets and liabilities, despite an improvement in net income. Capital expenditures, including tooling outlays, increased to $55.3 million in the year from $38.6 million a year ago.

Guidance Raised

BorgWarner anticipates sales to grow 28%–32% in 2010, up from the prior guidance of 15%–19% due to accelerated improvements in the markets. Consequently, earnings are expected in the range of $2.20–$2.50 per share, up from the previous outlook of $1.40–$1.70 per share.
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