BorgWarner on Wednesday said international sales offset steep declines in US revenue due to declining economic conditions there as it reported third quarter results and adjusted its outlook to reflect deteriorating global economic conditions and automotive production declines in Europe.

Third quarter sales of $1,316.9m were flat year on year though sales outside of US rose 5.5%.

US GAAP accounting standard earnings were a loss of $130.4m or $1.12 per share with results hit by one-time items including a charge of $(1.27) for a goodwill adjustment related to the BERU acquisition, a  valuation adjustment for foreign tax credits of $(0.12), a third quarter restructuring charge of $(0.16), and a charge related to the outcome of retiree healthcare benefits litigation of $(0.03).

Operating income margin was 5.6% excluding the one-time items.

The company adjusted 2008 full-year earnings guidance to $2.25 to $2.35 per share, excluding one-time items, compared with previous guidance of $2.80 to $2.95 per share.

"While we continued to generate growth from our international operations, the crisis in the financial sector and deteriorating global economic conditions negatively impacted our performance," said chairman and CEO Tim Manganello.

"We expect the unprecedented current economic environment to continue to affect our near-term results and create difficult conditions through 2009.  However, we are responding swiftly to these challenges, having expanded our North American restructuring programme during the third quarter and initiated actions in Europe."

CFO Robin Adams said: "Our adjusted guidance for 2008 reflects the rapid deterioration of the global economic environment beyond North America and the resulting near-term pressure on both sales and margins. Our current guidance reflects a 12% reduction in sales in the last six months of 2008 from our previous guidance, of which two-thirds of the sales decline is occurring in our operations outside of the US.

"Looking into 2009, our preliminary view of the year would indicate flat year-over-year sales, excluding the impact of foreign currencies which will be negative.  Our current production assumptions are a build rate of less than 12m units in North America and close to 13m units in western Europe.  Earnings could be flat year-over-year."

Nine-month sales rose 9.5% to $4,332.4m and net income was $45.8m, or $0.39 per share, compared with $217.3m, or $1.85 per share in the first nine months of 2007.