BorgWarner Inc. improved its profits in the fourth quarter as the automaker, driven by the demand from customers who want higher fuel efficiency. For the same period, the auto supplier reported a fourth-quarter net income of $127.5 million, or $1.00 per share – better than the $116.9 million or 89 cents, a year ago.
Its sales in the fourth quarter totaled $1.77 billion, about 16% higher than the previous year. Thomson Reuters said that BorgWarner had earnings of $1.19 per share (excluding nonrecurring items), surpassing Wall Street analysts' forecast of $1.17 per share.
According to J.P. Morgan analyst Himanshu Patel, the company’s fourth-quarter earnings improved by its stronger-than-expected operating margins of 12%, higher than its operating margin of 10.3% the previous year.
BorgWarner said that it expects a 2012 operating margin of at least 11.5%. It also seeks to boost sales between 10% and 12%. Detroit-based BorgWarner is one of the leading suppliers of fuel-efficient powertrain components and technology including turbocharging and duel clutch transmissions.
Turbocharging enables automakers to use smaller engines to offer the power and acceleration of bigger engines. BorgWarner benefited from stricter fuel economy standards. The U.S. will require 35 miles per gallon by 2016 and there’s a proposal to raise the fuel economy standard to almost 55 mpg by 2025.
For the 2011 full year, BorgWarner had a net income of $550.1 million, or $4.45 per share – higher than its 2010 net income of $377.4 million, or $3.07 per share. Its full-year 2011 sales of $7.11 billion increased by 26% from the previous year. The company sets the record with this annual sales figure.