BorgWarner Inc. (BWA) has revealed 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. The EPS growth was driven by sales growth and the lean cost structure of the company.
Consolidated sales in the quarter rose 29% to $1.2 billion. Sales in the Engine segment went up 25.4% to $850.3 million as demand for turbochargers and engine timing systems outpaced global production volume growth. Excluding the negative impact of currency, sales were up 18%.
Sales in the Drivetrain segment advanced 37.1% to $349.7 million. Excluding the negative impact of currency, the increase was 33%. Sales were boosted by strong sales of transmission components and torque management devices in the U.S., Europe and Asia.
Annual Results
In 2009, BorgWarner reported a profit of 40 cents per share (before special items) compared to $2.07 per share (before special items) in the previous year. The profit was significantly higher than the Zacks Consensus Estimate of 18 cents per share.
Consolidated sales ebbed 24.7% to $3.96 billion in the year. Sales in the Engine segment dipped 25.3% to $2.88 billion. Excluding the impact of currency, sales were down 22%. Sales in the Drivetrain segment declined 23.3% to $1.09 billion. Excluding the impact of currency, sales went down 20%.
Financial Position
BorgWarner had cash and cash equivalents amounting to $357.4 million as of December 31, 2009, an improvement from $103.4 million as of December 31, 2008. Long-term debt increased to $773 million as of the above date from $459.6 million as of the year-ago period. Long-term debt-to-capitalization ratio stood at 35%.
In 2009, cash flow from operating activities declined to $351 million from $400.8 million in the prior year. Capital expenditures, including tooling outlays, decreased to $172 million in the year from $369.7 million in 2008.
Looking Ahead
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 its 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.
However, BorgWarner is cautious about its European business due to uncertainty with respect to consumer demand and the impact of expiring government-sponsored incentive programs and other market dynamics.
Read the full analyst report on “BWA”
Zacks Investment Research
