BorgWarner sees blow to Q1 sales, lowers full-year guidance during pandemic

By -

As the pandemic started to impact the North American supply chain, BorgWarner said it was reassessing its previous full-year guidance, which had forecast net sales of $9.75 billion to $10.08 billion. Operating cash flow was expected to be $1.25 billion, and full-year free cash flow was expected to be $675 million to $725 million.

BorgWarner updated its guidance Wednesday, with net sales now expected to be $7.25 billion to $8 billion. Full-year operating cash flow is expected to be $530 million to $780 million, and free cash flow is expected to be $100 million to $300 million.

“Due to the impact of COVID-19/coronavirus, global light-vehicle production expectations remain volatile,” BorgWarner said in a statement.

The updated guidance excludes the potential impact from BorgWarner’s acquisition of Delphi Technologies, which the supplier announced Jan. 28. The $1.5 billion merger deal is expected to help position the two suppliers for the future as they have long been navigating headwinds in power electronics products and propulsion technologies and an industry shift toward electrification.

BorgWarner and Delphi announced Wednesday they resolved a potential snag in the transaction. BorgWarner earlier said Delphi breached deal terms by drawing down all of its available credit, about $500 million, to stabilize its balance sheet amid the pandemic.

Both companies now say they agreed to amended terms and BorgWarner consents to Delphi Technologies’ drawdown of its revolver. The amended transaction agreement also provides for new closing conditions, and the companies say the deal is expected to close in the second half of the year.

BorgWarner also addressed the impact of the tornado that hit its Seneca, S.C., plant April 13 in a first-quarter earnings presentation. The tornado killed one contract worker and four employees suffered minor injuries.

Damage to the machining area of the plant was limited while assembly area damage was more extensive, BorgWarner said.

The plant was not in operation at the time because of stay-at-home restrictions but resumed limited production May 4. The company said its Seneca plant supplies transfer cases, primarily for Ford Motor Co., Fiat Chrysler and Toyota.

“The production rates should improve throughout the month of May,” Lissalde said. “This was an amazing accomplishment.”

Delays at the plant could have jeopardized Ford’s pickups and large SUVs, including the F-150 and the four-wheel-drive and all-wheel-drive versions of the Expedition, Super Duty, Explorer and Transit and the Lincoln Navigator and Aviator.

Source link

Saurabh Shukla

Leave a Reply