UPDATE 2-BorgWarner profit off 36 percent, misses forecasts


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CHICAGO, Oct 27 (Reuters) - Auto parts maker BorgWarner Inc. on Friday said quarterly earnings fell 36 percent as vehicle production cuts by Detroit-based automakers put downward pressure on results.

Cuts in light truck and sport utility vehicle production in North America made the quarter especially challenging, said the company, which makes products such as turbochargers, clutch systems, engine timing devices and traction controls.

Several U.S. parts suppliers have warned that output cuts at General Motors Corp. , Ford Motor Co. and DaimlerChrysler AG's Chrysler Group will hurt results in the 2006 second half.

Net income fell to $39.2 million, or 68 cents per share, in the third quarter, from $61.4 million, or $1.07 per share, a year earlier. Revenue rose 1 percent to $1.06 billion.

Excluding one-time charges, BorgWarner earned 81 cents per share. On that basis, analysts, on average, expected 86 cents per share, on revenue of $1.1 billion, according to Reuters Estimates.

Sales rose 5 percent in its engine group segment to $736.4 million, but segment earnings fell 19 percent to $76.1 million due to pressure from higher costs for raw materials, mainly nickel, and lost U.S. sales.

Sales fell 8 percent in the drivetrain group to $330.1 million and segment earnings fell 45 percent to $13.2 million.

Also on Friday, BorgWarner said it expects $1.7 billion of net new business for the three-year period 2007 through 2009.

Europe accounts for 46 percent of the new business; Asia for about 27 percent, with the bulk in that region in Korea and China; and North America for about 27 percent, including transplant and domestic automakers, BorgWarner said.

About 73 percent of the business is in engine-related products such as turbochargers, ignition systems, emissions products and engine timing systems, it said. The rest is in transmission modules and all-wheel drive systems.

In September, BorgWarner said it would cut about 850 jobs, or 13 percent of its North American work force, and lowered its 2006 earnings forecast because of the production slump.

On Friday, BorgWarner stood by that full-year earnings forecast of $3.95 to $4.10 per share, excluding 15 cents per share of restructuring charges. Analysts expect $4.03.

Shares of BorgWarner were trading at $60.51 before the bell on Friday, down from a close at $61.31 Thursday on the New York Stock Exchange.



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