Borg's dual clutch automatic transmissions return the fuel economy of a manual, making them an increasingly popular automaker choice.
In a sign of difficult economic times, BorgWarner Incorporated posted this morning a negative swing of -$97 million in Q1, which is viewed by analysts as a good performance these days in the depressed auto supplier sector.
The word’s largest maker of automatic transmissions, including extremely efficient dual-clutch versions that are being adapted by most automakers, lost 6 cents a share or $7 million. This compares with earnings of 75 cents a share or almost $90 million in Q1 2008, which was before the Great Recession took hold and automotive production was slashed globally.
The loss was actually worse, at -12 cents a share, since the company excluded non-recurring items, including a 15 cent a share credit it took for shutting its fabled Muncie, Indiana, transmission plant. Still, losing only $14 million is considered a victory in the current economic climate, which can be likened to requiring the management team to running–and completing–a marathon in a hurricane.
“The restructuring actions we took in 2008, while difficult, have already begun to yield positive financial results,” said Timothy Manganello, Chairman and CEO.
The company has eliminated almost one quarter of its work force since the middle of last year, in a bid to remain profitable.
“We also continued to make structural cost adjustments during the first quarter to improve operating efficiency, and to address profitability and cash flow,” said Manganello.
“Special attention has been given to Drivetrain Group profitability where disappointing first quarter results were caused by declining volumes, European employee costs tied to operational issues and dual clutch growth-related costs. Going forward, the Drivetrain Group will benefit from the previously announced closing of the Muncie, Indiana, plant and operational improvements in Europe,” Manganello said.
Even with these actions, the outlook for the remainder of the year is uncertain so BorgWarner is assuming that production levels of the depressed first quarter will not increase for the rest of 2009. This is just the latest indicator that the worst auto sales slump in more than 40 years shows no signs of abating.
“Customer schedules remain uncertain, providing little clarity to the rest of the year. As a result, we are sizing our operations as if first quarter production levels will continue throughout the remainder of the year. However, our target in this more challenging scenario, is to still generate positive earnings and cash flow from operations,” Manganello said.