BorgWarner Reports Mixed Q3 Results, Net Sales Down 5% Amid Challenging Market Conditions

BorgWarner Inc. reported its financial results for the third quarter and the nine months ended September 30, 2024, highlighting a mixed performance in revenue and profitability compared to the previous fiscal period.

For the three months ended September 30, 2024, BorgWarner's net sales totaled $3,449 million, a decrease of $173 million (5%) from $3,622 million in the same period of 2023. The decline was attributed to lower volume, mix, and net new business, which collectively reduced sales by approximately $147 million due to a 6% decline in market production. Gross profit for the quarter was $636 million, down from $652 million, with a gross margin of 18.4%, slightly improved from 18.0% in the prior year.

Net earnings for the third quarter were $249 million, a significant decrease from $682 million in Q3 2023. This drop was influenced by a higher effective tax rate of 5% compared to 56% in the previous year, alongside restructuring expenses of $21 million, down from $56 million. Earnings per share from continuing operations increased to $1.08, compared to $0.37 in the same quarter of 2023.

For the nine months ended September 30, 2024, total net sales were $10,647 million, a slight decrease of $29 million from $10,676 million in the same period in 2023. However, net earnings from continuing operations rose to $814 million, up from $532 million, reflecting improved operational efficiency and cost management. The gross profit for the nine months was $1,965 million, with a gross margin of 18.5%, compared to 17.9% in the previous year.

BorgWarner's strategic developments included the completion of the spin-off of its Fuel Systems and Aftermarket segments on July 3, 2023, which resulted in a reduction of retained earnings by $1,810 million. The company also implemented a new business unit structure effective July 1, 2024, reporting results in four segments: Turbos & Thermal Technologies, Drivetrain & Morse Systems, PowerDrive Systems, and Battery & Charging Systems.

The company made several acquisitions, including the electric hybrid systems business of Eldor Corporation for €72 million ($78 million) in December 2023, aimed at enhancing its PowerDrive Systems product portfolio. Additionally, BorgWarner recorded restructuring charges of $65 million for the nine months ended September 30, 2024, as part of its ongoing efforts to streamline operations.

As of September 30, 2024, BorgWarner reported total assets of $15,137 million, an increase from $14,453 million at the end of 2023. Cash and cash equivalents rose to $2,000 million, up from $1,534 million. The company maintained a strong liquidity position with a $2 billion multi-currency revolving credit facility, which remains undrawn.

Overall, BorgWarner's performance reflects a challenging market environment, with strategic initiatives aimed at enhancing operational efficiency and expanding its product offerings in the evolving automotive landscape.