Fitch Ratings Services has boosted both the issuer default
rating as well as unsecured revolving credit facility and senior
unsecured notes ratings of
) to "BBB+" from "BBB" based on the company's debt reduction
measures. The ratings apply to unsecured revolving credit facility
of $650 million and senior unsecured notes of $655 million.
BORG WARNER INC (
Apart from the debt reduction measures, the agency is also
optimistic about the modest growth in worldwide auto production. It
is also impressed with the company's solid liquidity position and
potential free cash flow generation.
BorgWarner recorded a $148.7 million increase in total debt to $1.3
billion as of December 31, 2011 from $1.2 billion as of December
31, 2010. The rise in debt was attributable to the acquisition of
the Traction Systems division of Haldex and share repurchases. Debt
(net of cash) to capitalization ratio was 28.3% as of December 31,
2011 compared with 24.0% as of December 31, 2010.
However, the company will settle all Convertible senior notes of
3.50%, which are due in 2012, by issuing shares of the company. The
process of note settlement entails delivery of about 11.4 million
shares after conversion of all outstanding notes at initial
conversion rate. This will result in the reduction of the company's
debt and increase in stockholders equity by almost $374 million.
In 2011, the company's cash flow from operating activities rose to
$708.2 million from $538.9 million in the prior year. The increase
was mainly attributable to the increase in profit.
BorgWarner is a leading manufacturer of powertrain products for the
world's major automakers. The Company operates in two segments -
. Its products include four-wheel-drive and all-wheel-drive
transfer cases (primarily for light trucks and sport utility
vehicles or SUVs), as well as automatic transmission and timing
These products are manufactured and sold worldwide, primarily to
original equipment manufacturers of passenger cars, SUVs, trucks
and commercial transportation products. Its production and
technical facilities are spread over 60 locations across 19
countries in North America, South America, Europe and Asia. The
company's largest customers include
Ford Motor Co.
BorgWarner recorded a 34% increase in profit to $1.19 per share
(excluding special items of 19 cents per share) in the fourth
quarter of 2011 compared with 89 cents per share in the
corresponding quarter of last year. The profit surpassed the Zacks
Consensus Estimate by 3 cents per share.
Revenues in the quarter rose 16% to $1.7 billion. The increase was
driven by strong global demand for the company's products. The
quarter recorded a $6 million reduction in net sales due to
unfavorable impact of foreign currencies, primarily the Euro.
Currently, the stock currently retains a Zacks #1 Rank, which
implies a "Strong Buy" rating for the short-term.
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FORD MOTOR CO (
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