BorgWarner Inc. Business Report FY ended Dec. 2016
Financial Overview |
(in million USD) |
| FY ended Dec. 31, 2016 | FY ended Dec. 31, 2015 | Rate of change (%) |
Factors | |
| Overall | ||||
| Sales | 9,071.0 | 8,023.2 | 13.1 | 1) |
| Operating Income | 225.9 | 939.7 | (76.0) | 2) |
| Engine Segment | ||||
| Sales | 5,590.1 | 5,500.0 | 1.6 | 3) |
| Drivetrain Segment | ||||
| Sales | 3,523.7 | 2,556.7 | 37.8 | 4) |
Factors
1) Net Sales
-Net sales for the fiscal year ended December 31, 2016 increased 13.1% from the previous year to USD 9,071.0 million. Excluding the effects of weakening foreign currencies and the acquisition of Remy International in 2015, the Company’s net sales increased by 5.2%.
2) Operating Income
-The Company’s operating income for the fiscal year ended December 31, 2016 was USD 225.9 million, a 76.0% decrease from the previous year. Items contributing to the decrease in income include liabilities from asbestos-related claims, loss resulting from the acquisition of Remy International, restructuring expenses and asset impairment losses.
3) Engine Segment
-In the fiscal year ended December 31, 2016, the Company’s Engine segment had sales totaling USD 5,590.1 million, an increase of 1.6% over the previous year. Excluding the negative effect of foreign currency translation, net sales increased 3.1% over the previous year. Contributing factors include increased sales of light vehicle turbochargers and engine timing systems.
4) Drivetrain Segment
-Net sales for the Company’s Drivetrain segment in the fiscal year ended December 31, 2016 increased 37.8% over the previous year to USD 3,523.7 million. Excluding the effect of negative currency translation, the segment’s net sales increased 9.9%. Increased sales of all-wheel drive systems was the primary contributing factor towards the increase in the segment’s sales.
Restructuring
-In August 2016, the Company sold its 60% ownership interest in Divgi-Warner Pvt. Ltd. to its joint venture partner, Divgi Metalwares, Ltd., receiving cash proceeds of approximately USD 5.4 million. Divgi-Warner develops and manufactures transfer cases and synchronizer rings in India.
Contracts
-The Company announced that it will launch its electric drive module (eDM) with integrated eGearDrive transmission in two pure electric vehicles from a major Chinese automaker. Production is expected to begin in summer 2017. The eDM provides primary or secondary propulsion for pure electric or P4-type hybrid vehicles. The integrated design of the electric motor and transmission enables weight, cost and space savings. Through its high-efficiency gear train and compact, low-weight design, the eGearDrive transmission contributes to extended battery-powered driving range, which in turn reduces the battery capacity required. (From a press release on November 16, 2016)
-The Company supplies the electric auxiliary thermal coolant pump (ATCP) for a turbocharged compact SUV built by a major Chinese automaker. Featuring a brushless, no-leak, low-noise design with integrated microcontroller, the ATCP provides a continuous flow of coolant through auxiliary circuits even when the engine is shut down, helping auxiliary components maintain optimal operating temperature and contributing to longer component life, improved fuel economy and lower emissions. (From a press release on January 18, 2016)
-The tables below provides information on products the Company supplies for specific vehicle models.
| Product | Installed model (Engine) |
Note | |
| Wastegate turbochargers for hybrid vehicles | BYD "Qin", "Song", "Tang", "Yuan" | Used in 1.5-liter and 2.0-liter direct injection gasoline engines for hybrids | |
| Advanced engine timing systems | Alfa Romeo "Giulia", "Giulia Veloce" | Features next-generation silent timing chain to reduce mass and friction for improved fuel economy | |
| Variable cam timing technologies including CTA phasers and engine timing chain systems | Genesis "EQ900", "G90", "G80", Hyundai "Aslan", Kia "K7/Cadenza" | Supplies engine timing chain for Kappa, Gamma, Theta and Lambda engines | |
| Diesel cold-start system with ceramic glow plugs | SsangYong "Tivoli", "Korando", "Korando Sport" | - | |
| Variable turbine geometry turbochargers | Kia "Sorento", "Sportage" | Used in Hyundai-Kia Euro 6 diesel engines | |
| Advanced exhaust gas recirculation valve | Hyundai "Ioniq", Kia "Niro" | Compact valve lowers emissions and improves fuel economy by 3% | |
| eGearDrive transmission | Geely "EC7/Emgrand EV" | Uses efficient gear train for extended range and quiet performance | |
| Silent chains | Suzuki "Solio Hybrid" | - | |
| Product | Installed model (Transmission) |
Note | |
| Multi-segment friction plate technology | 2017 Ford "F-150 Raptor", Ford "F-150" with 3.5L EcoBoost engine | Used in Ford’s new 10-speed automatic transmission | |
| Clutch modules | Kia "K7/Cadenza", Hyundai "Aslan" | Used in 8-speed automatic front-wheel drive transmission | |
| Pre-emptive on-demand transfer case | Jaguar "XF", "XE", "F-PACE" | Works with Company centrifugal electro-hydraulic actuator to distribute torque between front and rear axle | |
Awards
-The Company was nominated as a strategic partner within Volkswagen’s “Future Automotive Supply Tracks” initiative for its expertise in turbochargers. (From a press release on May 23, 2016)
Outlook
-The Company is expecting to achieve organic sales growth between 3.5% and 6.0% in the fiscal year ending December 31, 2017.
R&D Expenditure |
(in million USD) |
| FY ended Dec. 31, 2016 | FY ended Dec. 31, 2015 | FY ended Dec. 31, 2014 | |
| Total | 343.2 | 307.4 | 336.2 |
| % of sales | 3.8 | 3.8 | 4.0 |
-No individual R&D contract exceeded 5% of the Company’s net R&D expenditures in the previous three fiscal years.
-The Company expects to spend approximately 4% of its net sales in R&D every year.
R&D Facilities
-The Company announced that it expanded the testing and lab capabilities at its Spain Technical Center (STC) in Vigo with the inauguration of a new research and development building. Featuring 1,630 square meters of office space, testing areas and laboratories, it can accommodate 85 employees and offers new testing equipment to develop leading technologies. (From a press release on November 17, 2016)
Patents
-As of December 31, 2016, the Company has more than 6,500 active patents and patent applications pending.
Capital Expenditure |
(in million USD) |
| FY ended Dec. 31, 2016 | FY ended Dec. 31, 2015 | FY ended Dec. 31, 2014 | |
| Total | 500.6 | 577.3 | 563.0 |
| % of sales | 5.5 | 7.2 | 6.8 |
-In the fiscal year ending December 31, 2017, the Company expects to have capital expenditures between USD 475 million and USD 525 million.
Investments outside U.S.
-The Company announced that it has broken ground for a new wholly owned production plant in the Eastern Seaboard Industrial Estate of Rayong, Thailand. The 6,500-square-meter facility will be the Company’s first turbocharger plant in Thailand and will produce turbochargers for a wide range of global automakers based in Asia. Construction is expected to be completed in May 2017. (From a press release on October 6, 2016)