BorgWarner Inc. Raises Bottom End of Guidance
Following a disappointing 2015 and a difficult start to 2016 -- management lowered long-term growth forecasts in January -- powertrain engineer BorgWarner Inc. (NYSE: BWA) was under pressure to deliver. The first-quarter results saw the company get back on track, and the recent second-quarter earnings saw the company trump its own expectations while slightly raising full-year guidance. Let's take a closer look at the earnings.
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BorgWarner Inc.'s growth prospects largely rely on auto production rates. Image source: Getty Images.
BorgWarner's second-quarter earnings: The raw numbers
The headline figures:
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Advertisement Warren Buffett Tells You How to Turn $40 Into $10 Million LeBron James: The Next Warren Buffett? Data source: BorgWarner Inc. presentations. Adjusted figures exclude foreign currency and acquisitions. It's a pretty good result, bearing in mind that, on the previous quarter's earnings call, CEO James Verrier talked of an environment in which risks were outweighing opportunities. One of those risks, namely a vote in favor of Brexit, came to fruition, although it's unclear how leaving the European Union would affect car production in the U.K. -- where BorgWarner's biggest clients,Ford and Volkswagen, have substantial operations. Indeed, Ford is believed to be considering closing plants in the U.K. Meanwhile, Volkswagen faces ongoing, and much documented, issues following the emissions scandal. Throw in an uncertain outlook for auto sales in North America and China and a commercial vehicle market that remains, in Verrier's words, "challenged," and BorgWarner clearly still has a lot to do in 2016. This was a solid quarter from BorgWarner. Increasing the bottom end of guidance was a welcome fillip, and investors will be hoping that the risks and uncertainties in BorgWarner's end markets don't come to fruition in the coming quarters. In truth, there is little the company can do about its end markets -- a company like BorgWarner will always be subject to speculation on production rates at its key automotive customers -- but so far in 2016 the company has executed in line with its game plan. A secret billion-dollar stock opportunity Lee Samahafree for 30 daysconsidering a diverse range of insightsdisclosure policyMarket uncertainties
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