BorgWarner has reported net earnings for the second quarter 22% down, hit by currency effects and a stronger dollar.

The company said the impact of foreign currencies decreased second quarter 2015 net sales growth by approximately 11% compared with second quarter 2014. However, excluding the impact of foreign currencies, it said net sales were up 4% compared with second quarter 2014.

Net earnings in the quarter were US$148m, or US$0.65 per diluted share, 22% down on the same quarter of last year.

"Our operations performed well in the second quarter despite a challenging environment for growth," said James R. Verrier, President and CEO of BorgWarner. Verrier maintains that underlying demand for the company's products remains strong, despite adverse developments in some global markets.

"The demand for our advanced powertrain technology, designed to improve fuel economy, emissions and vehicle performance, remained strong around the globe, but our growth was impacted by an unfavourable mix of light vehicle production in North America, slower light vehicle production growth in China and weak commercial vehicle markets around the world. Despite this, our operating income margin was an impressive 12.9% in the quarter, excluding non-comparable items."

BorgWarner also lowered its sales and profits full-year guidance on the basis of weaker than expected market conditions, particularly slower light vehicle production growth in China and an unfavourable production mix in North America.

Show the press release

BorgWarner Reports Second Quarter 2015 U.S. GAAP Net Earnings Of $0.65 Per Diluted Share, Or $0.75 Per Diluted Share Excluding Non-Comparable Items

UPDATES FULL YEAR NET SALES AND NET EARNINGS GUIDANCE FOR WEAKER THAN EXPECTED MARKET CONDITIONS

AUBURN HILLS, Mich., July 30, 2015 /PRNewswire/ -- BorgWarner Inc. (NYSE: BWA) today reported second quarter 2015 U.S. GAAP net earnings of $0.65 per diluted share. Excluding non-comparable items, net earnings were $0.75 per diluted share. Net sales were $2,032 million in the quarter.

Second Quarter Highlights:


    --  U.S. GAAP net sales of $2,032 million, down 7% compared with second
        quarter 2014.
        --  The impact of foreign currencies decreased second quarter 2015 net
            sales growth by approximately 11% compared with second quarter 2014.
        --  Excluding the impact of foreign currencies, net sales were up 4%
            compared with second quarter 2014.
    --  U.S. GAAP net earnings of $0.65 per diluted share.
        --  Excluding the $(0.08) per diluted share impact of restructuring and
            the $(0.02) per diluted share impact of tax adjustments, net
            earnings were $0.75 per diluted share.
        --  The impact of foreign currencies decreased net earnings by
            approximately $0.09 per diluted share in second quarter 2015
            compared with second quarter 2014.
    --  U.S. GAAP operating income of $243 million.
        --  Excluding the $20 million pretax impact of restructuring expense,
            operating income was $262 million, or 12.9% of net sales, down from
            13.5% in second quarter 2014.
Second Quarter Results: "Our operations performed well in the second quarter despite a challenging environment for growth," said James R. Verrier, President and Chief Executive Officer, BorgWarner. "The demand for our advanced powertrain technology, designed to improve fuel economy, emissions and vehicle performance, remained strong around the globe, but our growth was impacted by an unfavorable mix of light vehicle production in North America, slower light vehicle production growth in China and weak commercial vehicle markets around the world. Despite this, our operating income margin was an impressive 12.9% in the quarter, excluding non-comparable items."

2015 Guidance: Demand for the company's advanced powertrain technology remains strong around the globe. However, due to the impact of weaker than expected market conditions on its business, particularly slower light vehicle production growth in China, unfavorable mix of light vehicle production in North America and weak commercial vehicle markets around the world, the company has updated its 2015 full year guidance:


    --  Net sales growth is now expected to be within a range of -5.5% to -2.5%
        compared with 2014, down from -4% to 0% previously.
    --  Net earnings per share, excluding non-comparable items, is now expected
        to be within a range of $2.95 to $3.10 per diluted share compared with a
        previous range of $3.10 to $3.30 per diluted share.
    --  Operating income, as a percentage of net sales, excluding non-comparable
        items, is now expected to be "approximately 13%" compared with "above
        13%", previously.
Financial Results: Net sales were $2,032 million in second quarter 2015, down 7% from $2,197 million in second quarter 2014. Net earnings in the quarter were $148 million, or $0.65 per diluted share, compared with $190 million, or $0.83 per diluted share, in second quarter 2014. Second quarter 2015 net earnings included non-comparable items of $(0.10) per diluted share. Second quarter 2014 net earnings included a non-comparable item of $(0.06) per diluted share. These items are listed in a table below as reconciliations of non-U.S. GAAP measures, which are provided by the company for comparison with other results, and the most directly comparable U.S. GAAP measures. The impact of foreign currencies decreased net sales by approximately $248 million and decreased net earnings by approximately $0.09 per diluted share in second quarter 2015 compared with second quarter 2014.

For the first six months of 2015, net sales were $4,016 million, down 6% from $4,281 million in the first six months of 2014. Net earnings in the first six months of 2015 were $327 million, or $1.44 per diluted share, compared with $349 million, or $1.52 per diluted share, in the first six months of 2014. Net earnings in the first six months of 2015 included net non-comparable items of $(0.09) per diluted share. Net earnings in the first six months of 2014 included a non-comparable item of $(0.19) per diluted share. These items are listed in a table below as reconciliations of non-U.S. GAAP measures, which are provided by the company for comparison with other results, and the most directly comparable U.S. GAAP measures. The impact of foreign currencies decreased net sales by approximately $470 million and decreased net earnings by approximately $0.18 per diluted share in the first six months of 2015 compared with the first six months of 2014.

The following table reconciles the company's non-U.S. GAAP measures included in the press release, which are provided for comparison with other results, and the most directly comparable U.S. GAAP measures:



    Net earnings per
     diluted share               Second Quarter               First Six Months
                                 --------------               ----------------

                              2015              2014          2015                  2014
                              ----              ----          ----                  ----


    Non - U.S. GAAP                   $0.75                          $0.89                  $1.53 $1.71


    Reconciliations:

    Restructuring expense   (0.08)                   (0.06)                    (0.13)    (0.19)

    Gain on previously held
     equity interest                                        0.05

    Tax adjustments         (0.02)                                 (0.01)


    U.S. GAAP                         $0.65                          $0.83                  $1.44 $1.52
                                      =====                          =====                  ===== =====
Net cash provided by operating activities was $319 million in the first six months of 2015 compared with $326 million in first six months of 2014. Investments in capital expenditures, including tooling outlays, totaled $285 million in the first six months of 2015, compared with $257 million in the first six months of 2014. Balance sheet debt increased by $464 million and cash increased by $310 million at the end of second quarter 2015 compared with the end of 2014. The $154 million increase in net debt was primarily due to capital expenditures, dividend payments to shareholders and share repurchases. The company's net debt to net capital ratio was 15.6% at the end of second quarter 2015 compared with 12.8% at the end of 2014.

Engine Segment Results: Engine segment net sales were $1,413 million in second quarter 2015 compared with $1,498 million in second quarter 2014. Excluding the impact of foreign currencies, primarily the Euro, net sales were up 7% from the prior year's quarter, primarily due to higher sales of turbochargers. Adjusted earnings before interest, income taxes and non-controlling interest ("Adjusted EBIT") were $228 million in second quarter 2015, down 6% from $242 million in second quarter 2014. Excluding the impact of foreign currencies, Adjusted EBIT was $252 million, up 4% from second quarter 2014.

Drivetrain Segment Results: Drivetrain segment net sales were $627 million in second quarter 2015 compared with $709 million in second quarter 2014. Excluding the impact of foreign currencies, primarily the Euro, net sales were down 3% from the prior year's quarter, primarily due to lower sales of all-wheel drive systems. Adjusted EBIT was $72 million in second quarter 2015, down 19% from $89 million in second quarter 2014. Excluding the impact of foreign currencies, Adjusted EBIT was $76 million, down 14% from second quarter 2014.

Recent Highlights:


    --  BorgWarner has entered into a definitive agreement to acquire Remy
        International, Inc. (Remy), a global market leading producer of rotating
        electrical components. Under the terms of the agreement, BorgWarner will
        acquire each of the outstanding shares of Remy for $29.50 in cash, which
        implies an enterprise value of Remy of approximately $1.2 billion.The
        transaction is expected to close in the fourth quarter of 2015.
    --  BorgWarner supplies its latest wet friction technology for ZF's new 8-
        and 9-speed automatic transmissions. The 8-speed transmission features
        BorgWarner's multi-segment friction plates with intricate groove
        designs, and the torque converter for the 9-speed transmission utilizes
        a piston plate with BorgWarner proprietary friction material.
    --  BorgWarner produces a number of its advanced engine and drivetrain
        technologies for the new Great Wall Haval H9. The domestically produced
        sport utility vehicle is powered by a turbocharged 2.0-liter gasoline
        engine and features a BorgWarner engine timing system, turbocharger and
        2-speed Torque-On-Demand(® )(TOD) transfer case.
    --  The first dual-clutch transmission (DCT) for class 6 and 7 medium-duty
        trucks in North America is powered by BorgWarner's DualTronic(TM) clutch
        module. BorgWarner's fuel-efficient technology helps Eaton's new
        Procision(TM) 7-speed DCT improve fuel economy 8 to 10 percent compared
        with similarly equipped vehicles with torque converter automatic
        transmissions.
    --  BorgWarner's facilities in Bellwood and Frankfort, Illinois, received
        2014 Certificates of Achievement from Toyota Motor Engineering &
        Manufacturing North America, Inc. for Quality Performance. This
        Achievement Award recognizes suppliers that maintain less than 15
        defects per million parts (PPMs). Both facilities achieved 100% quality
        ratings and 0 PPMs in 2014.
    --  BorgWarner's regulated two-stage (R2S(®)) turbocharging technology
        improves the performance and fuel economy of Ford's new powerful
        2.0-liter diesel engine, the first Ford engine for passenger cars
        equipped with a two-stage turbocharging system. The fuel-efficient
        diesel engine will debut in the Ford Mondeo, S-Max and Galaxy in
        mid-2015 and will replace the 2.2-liter TDCi diesel engine.
    --  BorgWarner's manufacturing plant in Seneca, South Carolina, was
        presented with an Excellence in Quality Award from Honda North America.
        The award recognized outstanding product quality in 2014. Since 2002,
        BorgWarner's facility in Seneca has earned 12 supplier awards from
        Honda, including seven awards for quality, four for delivery and one for
        engineering innovation.

Original source: BorgWarmer