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US Auto-Parts Cos.' Profit Up On Rejuvenated Sales, Production Rates

By Paul Vigna And John Shipman There's a lot of confidence, and in some cases even a little swagger, coming from U.S. suppliers to global auto makers these days. After two very lean years where sales plunged and bankruptcies swept the industry, rejuvenated sales and production rates--U.S. auto sales rose 20% in April--are forging higher profits for auto-parts suppliers. Compared to record-low production levels in early 2009, this year's first quarter was "a blowout," BorgWarner Inc. (BWA) finance chief Robin Adams crowed last week. "You know, if there was a slaughter rule in the auto industry for year-over-year production performance, it would have been invoked in the first quarter," Adams said, referring to the gains. BorgWarner's first-quarter sales were up 57% from a year ago and 7% from the fourth quarter. The company's improved earnings resulted from increased global demand, higher volumes and the ever-present "cost control," Chief Executive Timothy Manganello noted. BorgWarner is just one of a host of auto suppliers enjoying the profit revival. ArvinMeritor Inc. (ARM) Tuesday posted a profit of $13 million compared with last year's $49 million loss; sales climbed 25% to $1.21 billion. Federal-Mogul Corp. (FDML) had income of $15 million after losing $101 million in last year's first quarter; sales jumped 20% to $1.49 billion. Johnson Controls Inc. (JCI) last week said sales rose 32% and income climbed to $274 million, compared with a $193 million loss a year ago. ArvinMeritor cited strength in emerging markets and a "slight improvement" in commercial vehicle volume in Europe. But it's seeing general improvement across its markets. "We're beginning to see a good upwards sales trend across all our markets," CEO Charles McClure said Tuesday. "South America's booming, India is back, China's at record levels, North America's steady and Europe is beginning to turn around." With strong production at car makers in Europe and North America, Johnson Controls CEO Stephen Roell said the company is "convinced that those trends will continue into the second half of the year." BorgWarner's Manganello is also optimistic, saying the company's improved outlook for 2010 "reflects our view that volumes will continue to recover" this year. One tangible gauge of increased vigor is capacity utilization. BorgWarner's Manganello estimated the company's utilization rate at 85% during the quarter, with some product lines "maybe even over 100%." By comparison, in the hard-hit building materials business, wallboard manufacturing capacity was still estimated to be around 50%. Despite the strong results compared to a year ago, some suppliers are maintaining a somewhat more careful view. Johnson Controls finance chief Bruce McDonald said routine summer shutdowns will lower auto production in the second half of the year. American Axle & Manufacturing Holdings Inc. (AXL) Chief Financial Officer Michael Simonte said it "is prepared for a gradual economic recovery." Simonte said the company estimates U.S. light vehicle sales this year at 11 million to 11.5 million at a seasonally adjusted annual rate, or SAAR. "While a bit lower than many of your U.S. SAAR estimates," Simonte told analysts during a conference call Friday, "we are happy to be conservative in our planning." AmericanAxle is "prepared for a gradual economic recovery," he added.

Stock News for Borg Warner (BWA)
DateTimeHeadline
04/21/201508:00:00BorgWarner Wins 2015 Automotive News PACE Award For Its Front-Wheel...
04/16/201508:00:00BorgWarner Supplies Variable Cam Timing and Engine Timing Technologies...
04/15/201515:00:00BorgWarner Receives 2015 Silver Crescent Award For Manufacturing...
04/15/201508:00:00BorgWarner Technologies Drive The 2015 World Car of the Year...
04/09/201507:00:00BorgWarner Opens New Facility In South Korea To Produce Expanded...
04/03/201508:57:48Toyota to get aggressive with global capacity
04/02/201513:22:23Statement of Changes in Beneficial Ownership (4)
03/31/201508:00:00BorgWarner Receives 2014 Supplier Quality Excellence Award From...
03/30/201513:10:13Statement of Changes in Beneficial Ownership (4)
03/30/201513:10:13Statement of Changes in Beneficial Ownership (4)
03/27/201517:00:00Webcast Alert: BorgWarner 2015 First Quarter Results Conference...
03/27/201508:00:00BorgWarner Receives 2014 Toyota Regional Contribution Award
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03/24/201518:21:07BorgWarner: Why Investors Can Expect A Turbocharged Performance...
03/24/201508:00:00BorgWarner's Turbocharging Technology Boosts All Of Volvo's New...
03/24/201508:00:00BorgWarner's Advanced Technologies Displayed At 2015 Mid-America...
03/20/201509:03:05Additional Proxy Soliciting Materials (definitive) (defa14a)
03/19/201508:00:00BorgWarner Introduces DuroSpeed⢠2-Speed Fan Drive For Vocational A...
03/17/201508:00:00BorgWarner Supports 2015 Dakar Rally Winner Team KAMAZ-master...
03/16/201512:11:43Current Report Filing (8-k)

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