12th
December 2008 -
BorgWarner Reduces Earnings Guidance to Reflect Industry Freefall
BorgWarner today reduced its earnings
guidance for 2008 to a range of
$1.85 to $1.95 per share before special items. Guidance was
reduced to reflect rapidly deteriorating conditions in the auto industry
that continue in every geographic region of the world. Previous guidance
was
$2.25 to $2.35 before special items.
Special items will include:
| - |
Previously
announced nine-month year-to-date charges: goodwill
adjustment of $(1.27) related to the BERU acquisition, BERU
purchase accounting adjustment of ($0.04), tax adjustment of
$(0.12), third-quarter restructuring charge of $(0.16), and
a charge related to the outcome of retiree healthcare
benefits litigation of $(0.03); |
| - |
Fourth quarter
2008 restructuring charges which are currently being
quantified; |
| - |
And a fourth
quarter 2008 charge of approximately $0.23 per share due to
a warranty issue associated with the company's dual-clutch
transmission products sold in Europe, limited to mid-2007
through May 2008 production. |
"The downward spiral of the auto industry
continues to accelerate across the globe," said Timothy
Manganello, Chairman and CEO of BorgWarner. "The crisis is not
solely a North American automotive industry issue, nor about perceptions
of domestic automakers not having the right products for the market.
Rather, this is a situation where consumers in every geographic region
of the world have become paralyzed by the global financial and economic
crisis. We are actively adjusting our cost structure, but are struggling
to respond fast enough to the daily stream of new customer information
on plant closings, extended holiday shutdowns and production schedule
reductions."
In response, the company will have
reduced 2008 global employee levels by approximately 2,900 people or 17%
of its workforce by year-end. Most North American operations will shut
down for extended holiday periods starting the week of December
15, 2008, and will re-open at various times in January,
depending on customer schedules. In Europe, in
addition to workforce reductions and extended holiday shutdown periods
similar to those in North America, the company has
gone to four-day work weeks in many facilities for an indefinite period
of time. The company plans to close a Drivetrain facility in the
United Kingdom
when its current four-wheel-drive product ends production there in 2010
and is evaluating other smaller product lines and manufacturing
facilities for longer-term strategic importance and viability.
"The uncertainty of the financial and
economic markets around the world has made this one of the most
difficult times in the history of the auto industry. This uncertainty
has severely impacted our ability to plan for and manage our day-to-day
operations," said Mr. Manganello. "The earliest we expect to see any
clarity in this situation is the end of the first quarter of 2009. We
continue to have a strong balance sheet and ample liquidity. The
fundamentals of our business remain strong with growth driven by a
technology focus on fuel economy and emissions reductions."
Auburn Hills, Michigan-based BorgWarner Inc. (NYSE:
BWA) is a product leader in highly engineered components and systems
for vehicle powertrain applications worldwide. The FORTUNE 500 company
operates manufacturing and technical facilities in 64 locations in 17
countries. Customers include VW/Audi, Ford, Toyota, Renault/Nissan,
General Motors, Hyundai/Kia, Daimler, Chrysler, Fiat, BMW, Honda, John
Deere, PSA, and MAN.
Source:
BorgWarner Press Release