BorgWarner expects a small profit this year after aggressive cost cuts while liquidity is sufficient to ride out any fallout from the bankruptcies of General Motors and Chrysler, its chief executive has said.
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Chief executive Tim Manganello told Reuters auto parts suppliers were under a “tremendous amount of stress” due to lack of financing and the US auto market which has tumbled to its lowest sales level in nearly 30 years.
But aggressive cost cuts and rising demand for its fuel-saving products have positioned the supplier for a profit in 2009 even at depressed vehicle production volumes, he added.
“BorgWarner is sized for 8.2m units in production in 2009. We are targeting ending the year slightly positive for cash flow and slightly positive for profits,” Manganello said.
“If the market is 9m units of production, we should be OK. I think the market will be better than that, but I sized the company to be very conservative.”
Manganello said BorgWarner had received full payments for April shipments to GM and Chrysler. It was paid by GM on 28 May and expects the next payment on 2 July for its May receivables.
Chrysler idled production after filing for bankruptcy on April 30. Manganello told Reuters he expected to ship to Chrysler under normal terms and conditions when production resumed.
He added he did not expect a recovery in the North American market until the third quarter of 2010.
“Things might improve slightly, but we are not out of the woods, we are not out of the woods by a long shot,” he said.
