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BorgWarner Q1 earnings: Net income triples over weak results last year

Auto supplier BorgWarner Inc. saw its net income more than triple to $200 million in the first quarter of 2022, while its revenue decreased because of shaky foreign currencies and decreased production.

BorgWarner’s net income of $200 million represents more than a 200 percent increase from last year’s $65 million. But last year, net income fell by nearly half as a result of a one-time $272 million loss on equity securities.

The supplier said net sales fell 3 percent from a year earlier to $3.87 billion. In a press release, BorgWarner said “excluding the impact of foreign currencies and the impact of divestitures, organic sales were up 1 percent compared with first quarter 2021.”

Most of the company’s business units reported declines in revenue through the quarter. First-quarter revenue from BorgWarner’s air management unit fell about 4 percent to $1.9 billion, e-Propulsion & Drivetrain fell nearly 6 percent to $1.4 billion and fuel injection fell 0.63 percent to $427 million. Aftermarket sales increased 4 percent to $205 million.

Additionally, first-quarter operating income fell nearly 13 percent to $352 million — or 9.1 percent of total sales — from the same period in 2021. Last year, operating income doubled to $403 million.

The results come as the automotive industry has struggled with the impact of inflation, which reached a 40-year high of 8.5 percent in March.

“Our margin performance was negatively impacted by higher commodities and other inflationary costs,” CEO Frederic Lissalde said in a Wednesday call to investors. “However, our M&A synergies and restructuring savings helped partially mitigate these headwinds.”

CFO Kevin Nowlan said while margin performance was “respectable” in the face of inflation, BorgWarner would continue to monitor the situation.

“As we look out to the balance of 2022, near-term industry pressures are likely to continue with ongoing production disruptions in multiple markets as well as continuing material costs and inflation pressure,” Nowlan said on the call.

“As a management team, we continue to work to strike a balance between managing the present by sustaining our strong margin and cash flow profile, while at the same time maintaining the momentum and delivering our long-term plans.”

BorgWarner said it anticipates net sales for the year to range from $15.5 billion to $16.0 billion, up from $14.8 billion in 2021.

BorgWarner shares were up 1.7 percent to $38.81 when the market closed Wednesday.

BorgWarner ranked No. 23 on the Automotive News list of the top 100 global suppliers with nearly $10 billion in sales to global automakers in 2020.


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