BorgWarner, Dana cut forecasts on falling European demand
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DETROIT (Bloomberg) -- BorgWarner Inc., which makes turbochargers, and Dana Holding Corp., a maker of axles for cars, trucks and construction equipment, lowered their forecasts for annual sales and profit because of the economic slowdown in Europe and other markets.
The revised forecasts reflect the financial difficulties their customers having in Europe, headed for its fifth-straight year of declining sales. Automakers, including General Motors Co. and Ford Motor Co., are struggling to cut losses in the region.
"Our gut instinct is that the auto names overall are unlikely to gain traction until the European overhang eases at least modestly," Peter Nesvold, an analyst with Jefferies & Co., wrote in a research note today about BorgWarner.
Dana, based near Toledo, Ohio, said profit this year will fall slightly from earlier projections. Dana, in a statement, cited “softening production demand in certain end markets” for its lower forecast.
BorgWarner said profit this year would be somewhat lower than originally expected. It also said annual sales will rise 4 percent to 6 percent, compared with an earlier forecast of as much as 12 percent, according to a statement.
'Negatively impacted'
"Our outlook for Europe and for commercial vehicle markets around the world has been negatively impacted by the general slowdown in the global economy," BorgWarner CEO Tim Manganello said in the statement.
BorgWarner’s profit in the three months ended June 30 fell 26 percent to $120.6 million, or $1 a share, from $162 million or $1.31 a share. Sales rose 2.1 percent to $1.86 billion.
The decline of the euro against the dollar during the quarter cost BorgWarner 9 cents a share and lowered sales by $135 million. Last year, Europe accounted for more than one-half of total revenue.
Dana reported a 26 percent increase in profit to $86 million from $68 million, while adjusted earnings per share rose to 56 cents a share from 45 cents. Sales rose less than 0.1 percent to $1.95 billion.
Reuters contributed to this report.
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