CEO Fred Lissalde: "We expect to outgrow the market in 2018."
The supplier of engines and drives, BorgWarner Inc., expects to continue improving the market for new vehicles, partly by boosting its activities in the field of hybrids and electric vehicles, despite the lower than expected production by global car manufacturers and the effect of new international rates. the company said in delivering the third quarter report.
"We expect to outgrow the market in 2018," said BorgWarner CEO Fred Lissalde. Recent introductions of new BorgWarner products include an electric drive module – a combined electric motor and transmission – for a new electric vehicle from Great Wall Motors in China.
The company said Thursday that net revenue during the quarter has risen by 10 percent to $ 204 million. Sales were $ 2.5 billion in the third quarter, up 3 percent from a year ago. Sales increased 10 percent to $ 8 billion for nine months. The net result increased by 20 percent to $ 701 million.
BorgWarner shares rose 5.4 percent and closed Thursday at $ 37.71.
Overpowered
Nevertheless, the company acknowledged that it could not do much in the third quarter to recover additional costs imposed by new tariffs, such as negotiating compensation from customers of BorgWarner's automaker, or re-sourcing components from different markets to avoid new tariffs.
CFO Ron Hundzinski said that the rates and inflation are combined to cost BorgWarner about $ 10 million in the third quarter, and probably in the fourth quarter.
"For 2018 we have a low recovery. … The $ 20 million you see in & # 39; 18, that's what we've made. [those costs] ", he said, adding that there are still negotiations going on with manufacturers, before 2019 Hundzinski said that BorgWarner would focus on" more recoveries from our customers than zero ".
On the watch
Despite the headwind of rates and production reductions, BorgWarner predicted "organic" sales growth – that is, excluding the impact of possible mergers or acquisitions – from 4.5 percent to 5.5 percent by 2018, despite "modestly decreasing" industrial new vehicle production.
Lissalde said BorgWarner is always looking for "small, medium and large" potential mergers and acquisitions. During the conference call he was asked how big is. That is to say, whether a "large" merger or acquisition could be at a company of the same size or much larger than at BorgWarner. Lissalde hinted that this was unlikely.
"If you ask what & # 39; s big & # 39; means, medium is larger than small, large is larger than medium, and Deposit is huge according to these standards, Deposit would be huge," he said.
BorgWarner is number 25 on the Automotive News list of the top 100 global suppliers, with worldwide car sales to $ 9.8 billion in 2017.