CHICAGO -- Auto parts maker BorgWarner Inc. said on Monday that quarterly earnings rose 25 percent as increased demand for engine technology such as turbochargers in Europe and Asia offset rising steel costs.
Solid sales growth in engines and drivetrains, and administrative and manufacturing cost cuts, helped boost results despite stagnant market conditions and significant price increases for steel and other materials, it said.
Net income rose to $44.8 million, or 79 cents per share, in the third quarter from $35.9 million, or 65 cents per share, a year earlier, BorgWarner said. Sales rose 15.8 percent to $839.8 million overall.
Analysts on average expected BorgWarner to earn 75 cents per share, according to Reuters Estimates.
BorgWarner has seen turbocharger demand surge, both for more fuel-efficient diesel cars in Europe and replacement heavy trucks in North America, which also use diesel engines. The company also has seen growth from European and Asian automakers turning to chain timing systems from belt systems.
Several U.S. auto parts makers warned in recent weeks that North American light-vehicle production cuts at Ford Motor Co. and General Motors, and rising raw materials costs, would hurt results.
Sales in Europe and Asia were particularly strong and helped to overcome a year-over-year decline in North American production last quarter, BorgWarner said.
Engine group sales rose 18 percent to $532.7 million on demand from Asian and European automakers for turbochargers, timing systems and emissions products, and from stronger commercial vehicle production in Europe and North America.
Drivetrain group sales rose 12 percent to $318.7 million on demand for transmission and four-wheel drive systems among Asian and European automakers especially, BorgWarner said.
The company said it expects to continue to grow faster than the automotive industry and will release its new business forecast for 2005 through 2007 in early November.
BorgWarner said it stands behind full 2004 earnings-per-share forecasts of from $3.60 to $3.70 a share despite commodity price pressures and the expected auto production declines in the fourth quarter.
Analysts on average expect BorgWarner to earn $3.64 per share for 2004, according to Reuters Estimates.
BorgWarner is 29th on the Automotive News ranking of top suppliers to North American auto manufacturers in the United States in 2003 with $1.5 billion in original equipment sales.