BorgWarner Inc. (BWA) reported a profit for the third quarter, mainly in the absence of a year-ago hefty goodwill impairment charge, but sales declined from last year. However, non-GAAP earnings per share fell year-over-year, yet beat the Street expectations. Following the news, shares of the company are currently down more than 6%.
Third-quarter net earnings attributable to the company were $17.2 million or $0.15 per share, compared with a loss of $130.4 million or $1.12 per share in the last year. Net earnings for the quarter were $20 million versus a loss of $128 million in 2008.
The company said its third-quarter 2008 results included a restructuring charge of $0.16 per share, a charge of $1.27 per share for a goodwill adjustment related to the BERU acquisition, a valuation adjustment for foreign tax credits of $0.12 per share, and a charge related to the outcome of retiree healthcare benefits litigation of $0.03 per share.
In addition, BorgWarner stated that the foreign currencies impact, primarily the lower Euro, lowered its third-quarter 2009 sales by around $50 million compared with the last year, and reduced earnings by about $3 million or $0.03 per share.
Non-GAAP earnings per share for the recent quarter fell sharply to $0.15 from $0.44 in the prior year. On average, 16 analysts polled by Thomson Reuters expected earnings per share of $0.10 for the quarter. Analysts' estimate typically excludes one-time items.
Net sales for the third quarter of 2009 decreased 22% to $1.03 billion from $1.32 billion in the year earlier period. Eleven analysts estimated revenues of $1.01 billion for the quarter. Excluding the negative impact of currency, the decline would have been about 18%, the company noted.
The company's engine segment group net sales dropped to $735.3 million from $974.1 million, and sales for Drivetrain Group declined 14.5% to $296.8 million from $347.2 million last year.
BorgWarner reported a third-quarter operating income of $27.5 million versus a loss of 103.9 million a year ago.
For the nine-month period, net loss attributable to the company was $25.7 million or $0.22 per share versus a net profit of $45.8 million or $0.39 per share in the first nine months of 2008.
For nine months, non-U.S. GAAP loss per share was $0.03 in comparison with a profit of $1.97 in the earlier period.
Net sales for the first nine months of 2009 totaled $2.76 billion, down 36.2% from $4.33 billion in the 2008 period. Excluding the negative impact of currency, the decrease would have been about 31%, the company reported.
Looking ahead to the fourth quarter, the company expects to report a profit, with production volumes incrementally higher than third quarter levels in North America. However, visibility in Europe remains limited due to uncertainty surrounding consumer demand, the impact of expiring government-sponsored incentive programs and other market dynamics, BorgWarner noted.
BWA is currently down more than 6% and trading at $30.46 on a volume of 646K shares on the NYSE.
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