BorgWarner Swings To 4Q Net Loss Amid Restructuring Charges

   DOW JONES NEWSWIRES 
 

BorgWarner Inc. (BWA) swung to a fourth-quarter net loss, stung by auto makers' steep production cuts as it took restructuring charges amid a work force reduction at the end of last year.

But the maker of auto engines and transmissions also said it expects to return to profitability in 2009, aided by its diverse customer base.

Auto suppliers such as BorgWarner, Tenneco Inc. (TEN) and Visteon Corp. (VC) are in a precarious spot as U.S. auto makers pare swollen inventories, particularly in North America. Last-minute plant-idling announcements hit suppliers especially hard since many companies gear their output based on guidance provided by the auto makers weeks to months in advance.

BorgWarner reported a net loss of $81.4 million, or 70 cents a share, compared with net income of $71.2 million, or 60 cents a share, a year earlier.

The latest period included per-share charges of 56 cents, largely for the job cuts and 23 cents for other restructuring moves. Excluding items, the company had break-even earnings.

Net sales skidded to $931.5 million, down from $1.4 billion.

The stronger dollar reduced sales by $114.1 million.

Analysts polled by Thomson Reuters were expecting a loss of 8 cents a share, excluding items, on revenue of $1.04 billion.

Gross margin plunged to 7.9% from 18.8%.

Excluding currency exchange effects, sales outside the U.S. fell 22%.

In December, BorgWarner said it would cut 2,900 workers, or 17% of its work force, because it was "struggling to respond fast enough" to Detroit's constantly shrinking production needs. The company also said it would shutter a U.K. drivetrain facility in 2010.

BorgWarner is just the latest auto supplier to post a quarterly loss, following Tenneco, ArvinMeritor Inc. (ARM), American Axle & Manufacturing Holdings Inc. (AXL) and Johnson Controls Inc. (JCI).

Last week, an industry group representing 400 parts makers asked the federal government for $25.5 billion in aid, following the lead of Detroit's Big Three. The request signals a potentially significant broadening of the government's auto industry bailout efforts. Congress already has provided $17.4 billion to General Motors Corp. (GM) and Chrysler LLC, and an additional $7.5 billion to the finance companies associated with the two auto makers.

Shares closed Wednesday at $18.89 and didn't trade premarket. The stock has lost about two-thirds of its value since May.

-By Mike Barris, Dow Jones Newswires; 201-938-5658; [e-mail]