BorgWarner has provided its initial guidance for 2015 net sales, earnings per diluted share, operating income as a percentage of net sales, effective tax rate and free cash flow. The company also reaffirmed its 2014 earnings per diluted share guidance and updated its 2014 net sales guidance.
2014 guidance update:
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- Net sales growth in 2014 compared with 2013, is now expected to be approximately 11.5%, down from a range of 12% to 13%, due to weaker foreign currencies and slightly softer than expected volumes.
- 2014 net earnings guidance of US$3.23 to $3.28 per diluted share, excluding non-recurring items, is unchanged.
2015 guidance highlights:
- Net sales growth of 2% to 6% compared with updated 2014 guidance. Excluding the impact of weaker foreign currencies, net sales growth is expected to be 9.5% to 12%.
- The company has provided, at the end of this release, a table to illustrate the impact of net new business, changes in product pricing, base business growth and foreign currencies on its net sales growth guidance range.
- Net earnings of $3.35 to $3.55 per diluted share. Excluding the impact of weaker foreign currencies, net earnings are expected to be $3.60 to $3.75 per diluted share, up 11% to 14% compared with 2014 net earnings guidance of $3.23 to $3.28 per diluted share, excluding non-recurring items.
- Operating income as a percentage of net sales above 13%.
- Effective tax rate of 29%.
- Free cash flow within a range of $350m to $400m.
“In 2015, we expect another record year for net sales and net earnings,” said James Verrier, BorgWarner president and CEO. “Our backlog of net new business is expected to drive net sales growth of 9.5% to 12% in 2015 compared with 2014, excluding the impact of weaker foreign currencies, as demand for our product technologies that improve fuel economy, emissions and performance, continues to accelerate around the globe.”
“We expect the strengthening dollar to have a meaningful impact on our 2015 net sales,” Verrier said. “Approximately three quarters of our net sales are in foreign currencies, notably the Brazilian real, Chinese yuan, euro, Japanese yen, Korean won, Mexicanpeso and Swedish krona, all of which we expect to be weaker against the dollar in 2015 compared with 2014.”
The company expects operating income as a percentage of net sales to be ‘above 13%’ in 2015, up from its guidance of ‘approaching 13%’ for 2014. The improvement can be largely attributed to incremental income from higher net sales and an ongoing focus on managing costs. Strong operational performance is expected to offset the costs of global growth, restructuring-related inefficiencies and other inflationary cost pressures. 2015 is expected to be the sixth straight year in which operating income as a percentage of net sales has improved.
2015 net sales growth guidance range
|
Low end |
High end |
|
|
Net new business |
10.3% |
11.5% |
|
Changes in product pricing |
-2.0% |
-2.0% |
|
Base business growth |
1.2% |
2.6% |
|
Foreign currencies |
-7.5% |
-6.0% |
|
Total |
2.0% |
6.0% |
