CHICAGO (Reuters) - Auto-parts makers are bracing for a tough ride this year as North American vehicle manufacturers cut production, but company officials say growth in other regions will pick up the slack.
As the slowing U.S. economy and slumping housing market raises concerns about the possibility of a recession, car makers and analysts mostly expect North American sales and production will decline in 2008.
Meantime, continued steady growth was anticipated in the booming Asian markets and a relatively strong year was expected in Europe, leaving worldwide production increasing overall.
BorgWarner Inc., which produces turbochargers and other components that improve engine power and fuel economy, forecast earnings growth that exceeded analysts' forecasts due to strength in Europe and Asia.
BorgWarner said it was looking for earnings growth of up to 25 percent in 2008, and expects its European and Asian business to flourish. It restructured in North America previously to match industry production cuts.
JP Morgan analyst Himanshu Patel said the outlook was a modest positive for BorgWarner.
" The comments are modestly reassuring for the overall auto-parts space as well given there seems to be no incremental worsening in NA/Europe production outlook for 2008," Patel said in a research note.
Lear Corp. raised its final forecast for 2007 sales and core operating earnings for its auto seating and electronics business and left intact expectations that those figures would be about flat in 2008 with its prior forecasts.
Lear expects 2007 sales of about $15.3 billion, up from its prior forecast for $15 billion and continues to expect sales in 2008 of about $15 billion, matching analysts' expectations.
Lear expects core operating earnings of about $750 million in 2007, up from a prior forecast for $680 million, which remains the forecast for 2008.
American Axle & Manufacturing Holdings Inc. said last week it would continue to be a main driveline producer for General Motors' full-size light pickups and SUVs, a key retention for the Detroit parts maker.
American Axle also said last week 558 of 650 eligible UAW-represented members at an idled plant in Buffalo agreed to take buyouts or buydowns. It also said the program would cost about $56 million, down from an $85 million estimate.
" This should enable the company to achieve much further savings in 2008 versus 2007," Lehman analyst Brian Johnson said in a note to clients. " We believe the ongoing savings could be particularly significant."
The North American auto industry was weak in 2007 and is expected to be weaker in 2008, but 2007 results overall from American Axle were solid, CEO Richard E. Dauch said at a conference last week.
Visteon Corp. also said 2007 sales and operating earnings were better than it had expected, and it would continue its multiyear restructuring in 2008 and 2009 as product sales decline due to divestitures and plant closings.
The company has pared its business units to focus on electronics, climate controls and interiors where it has been winning new business and expects to be profitable in 2010.
Visteon sold nearly two dozen facilities back to its former parent Ford Motor Co. in 2005 and has continued a restructuring program in North America to fix, sell or close 30 other facilities.
The company has completed action on 18 facilities and expects to address another eight in 2008 and four in 2009. Visteon expects Asia to be its strongest revenue region in 2010, with about 37 percent of revenue.
Visteon expects 2007 sales of $10.7 billion, up from its prior forecast for $10.6 billion. Sales are expected to decline to $9.7 billion in 2008 and to $9.4 billion in 2009. It expects sales of about $9.8 billion in 2010.
