BorgWarner Inc. (BWA) and Tenneco Inc. (TEN) each swung to
first-quarter profits, as a rebound in the auto industry helped the
parts makers post surging sales and improved margins.
Both companies reported results that topped expectations, and
the strong results led BorgWarner to lift its full-year
outlook.
The industry's outlook has improved in recent months on
expectations sales will continue to improve in North America, as
well as expansion into in Asia and possible stabilization in
Europe. Ratings agencies have become increasingly more optimistic
about BorgWarner and Tenneco, in part due to expected launches of
commercial vehicle programs later this year, as well as benefits
from cost cutting.
On Thursday, power-train products maker BorgWarner posted a
profit of $76.2 million, or 63 cents a share, compared with a
year-earlier loss of $7 million, or 6 cents a share. The latest
results included 2 cents in charges. Revenue jumped 57% to $1.29
billion.
Analysts surveyed by Thomson Reuters expected a profit of 41
cents on revenue of $1.21 billion.
Gross margin climbed to 18.5% from 9.7%.
BorgWarner also lifted its full-year targets, seeing earnings of
$2.20 to $2.50 on a 28% to 32% increase in revenue, up from its
February targets of $1.40 to $1.70 on a 15% to 19% increase in
sales.
The engine business, BorgWarner's biggest by sales, saw revenue
rise 45% while profit nearly tripled. Meanwhile, drivetrain sales
surged 95%, helping the segment swing to an operating profit.
Tenneco, which makes shock absorbers, suspensions and manifolds,
reported a profit of $7 million, or 11 cents a share, compared with
a year-earlier loss of $49 million, or $1.05 a share. The latest
period had 14 cents in charges. Net sales were up 36% to $1.32
billion.
Wall Street projected a profit of 15 cents on sales of $1.31
billion.
Gross margin grew to 18.5% from 14.5%.
BorgWarner's shares closed Wednesday at $39.95, while Tenneco's
stock closed at $24.67. Both were inactive in premarket
trading.
-By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com