BorgWarner, Dana reduce forecasts on declining demand in Europe
DETROIT (Bloomberg) -- U.S.-based auto suppliers BorgWarner Inc. and Dana Holding Corp. lowered their forecasts for annual sales and profit because of the economic slowdown in Europe and other markets.
The revised forecasts reflect the financial difficulties their customers are having in Europe, which is headed for its fifth-straight year of declining sales.
Automakers, including PSA/Peugeot-Citroen, General Motors and Ford, are struggling to cut losses in the region.
"Our gut instinct is that the auto names overall are unlikely to gain traction until the European overhang eases at least modestly," Peter Nesvold, an analyst with Jefferies & Co., wrote in a research note Thursday about BorgWarner.
Dana, which makes car and truck axles, said profit this year will be $1.94 to $2.01 a share, compared with a forecast of as much as $2.05 that it reaffirmed on April 25.
Dana, in a statement, cited "softening production demand in certain end markets" for its lower forecast.
BorgWarner, which makes turbochargers, said profit this year would be $5.05 to $5.25 a share, compared with a January forecast of as much as $5.65, because of "weakening global economic conditions."
"Our outlook for Europe and for commercial vehicle markets around the world has been negatively impacted by the general slowdown in the global economy," Tim Manganello, BorgWarner's CEO, said in the statement.
BorgWarner's profit in the three months ended June 30 fell 26 percent to $120.6 million, or $1 a share, from $162 million or $1.31 a share.
Sales rose 2.1 percent to $1.86 billion, compared with $1.96 billion, the average of 14 analysts' estimates. Excluding some costs and charges, profit was $1.36 a share. On that basis, 21 analysts in a Bloomberg survey estimated $1.37 a share.
Dana reported a 26 percent increase in profit to $86 million from $68 million, while adjusted earnings per share rose to 56 cents a share from 45 cents.
The average of 14 estimates was for a profit of 51 cents. Sales rose less than 0.1 percent to $1.95 billion, compared with $2 billion, the average of 10 estimates.
Dana ranks No. 24 on the Automotive News Europe list of the top 100 global suppliers with worldwide sales to automakers of $7.6 billion in 2011. Europe accounted for 28 percent of that total.
BorgWarner ranks No. 27 on the list with worldwide sales to automakers of $7.1 billion in 2011. Europe accounted for 50 percent of that total.