Due to the rising demand for BorgWarner Inc.’s fuel economy systems and technologies, it was able to post higher quarterly profits. In the second quarter, the auto parts supplier took a profit of $1.31 per share compared with $0.68 per share in the same period last year.
If a patent infringement settlement payment from Honeywell and an adjustment related to taxes are excluded, BorgWarner posted earnings of $1.12 per share in the latest period. Sales increased by 28% to $1.8 billion.
BorgWarner’s gains are partly due to the increased demand from automakers such as Ford Motor Co. and Volkswagen AG. They want to acquire technology that is used to boost engine efficiency and reduce emissions.
Pushing up the demand further is the high gas prices as well as a shift toward stricter emissions standards by the U.S. government. In addition, BorgWarner took advantage of a demand shift in Europe toward vehicle types like diesel engines that use more of its products.
BorgWarner said its engine group, which makes up about 70% of sales, recorded a 28% revenue growth during the second quarter. This unit, which led to the 48% increase in earnings, makes turbochargers, emission system components and timing chains.
In addition, BorgWarner is believed to benefit from the latest acquisitions and favorable currency impacts. After citing higher production volumes, BorgWarner raised its 2011 earnings per share forecast, excluding items, to a range of $4.25 to $4.45. This is a significant increase from $3.85 to $4.15 previously.