Despite record second quarter sales and profits, thanks to strong demand for powertrain technologies in Europe and Asia offsetting declines in North America, BorgWarner has reduced its full-year guidance to a range of $2.80 to $2.95 a share.
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Record sales of $1,516.6m were up 11% from second quarter 2007 while sales outside the US grew 13%year on year. Earnings of $0.74 a share were up 16% from second quarter 2007. Operating income margin was 8.3%.
The company is sticking to its 2008 full-year sales growth expectation of 8% to 10% but lowered full-year earnings guidance to $2.80 to $2.95 a share, the lower end of previous guidance of $2.85 to $3.00.
This excludes costs related to the third-quarter North American restructuring and final purchase accounting adjustments related to Beru, and includes adjustments for currency, primarily a stronger Euro.
The company estimates a third quarter pretax restructuring charge of $10m to $12m and said benefits from the restructuring expected in the second half are included in its revised guidance.
“We are taking proactive steps to maintain and enhance our global competitive advantage,” chairman and CEO Tim Manganello said.
“These steps include further restructuring our North American operations in the third quarter. Our decision was not made lightly or without regard for the interests of our employees, but was necessary to address what we view as a continuing, fundamental, permanent shift in the North American auto industry. By taking action now, we expect to successfully manage our business through an extremely difficult period.
“Higher oil prices, while currently disruptive, highlight the critical need for fuel efficient technologies like ours.”
Sales were $1,516.6m in the second quarter, up 11% from $1,364.3m a year ago. Net income was $87.5m or $0.74 a share compared with $75.7m, or $0.64 a share in second quarter 2007.
Sales were up 14% to $3,015.5m in the first six months of 2008. Net income was $176.2m or $1.49 a share, compared with $134.1m and $1.14 a share in H1 2007.
Operating income was $121.0m, or 8.0% of sales, in second quarter 2008 versus $113.6m, or 8.3% in 2007.
