BorgWarner Reports Slight Increase in Net Sales but Decline in Profitability for Q2 2025

BorgWarner Inc. reported its financial results for the second quarter and first half of 2025, revealing a slight increase in net sales but a decline in profitability compared to the previous year. For the three months ended June 30, 2025, the company generated net sales of $3.638 billion, a 1% increase from $3.603 billion in the same period of 2024. However, net earnings attributable to BorgWarner Inc. decreased to $224 million, or $1.03 per diluted share, down from $303 million, or $1.39 per diluted share, in the prior year. For the six months ended June 30, 2025, net sales totaled $7.153 billion, a decrease from $7.198 billion in 2024, with net earnings falling to $381 million from $509 million.

The company's financial performance was impacted by several factors, including fluctuations in foreign currencies, which contributed to a $66 million increase in sales but also led to a $55 million rise in cost of sales. The gross profit margin declined to 17.6% in the second quarter of 2025 from 19.0% in the same quarter of 2024, primarily due to increased costs associated with tariffs and unfavorable pricing. Selling, general, and administrative expenses decreased to $317 million from $341 million year-over-year, reflecting a reduction in employee-related costs and research and development expenses.

Strategically, BorgWarner has made significant changes, including the decision to exit its charging business within the Battery & Charging Systems segment, which is expected to eliminate approximately $30 million in annualized adjusted operating losses by 2026. The company also completed the spin-off of its Fuel Systems and Aftermarket segments into a separate entity, PHINIA, in July 2023. This restructuring is part of BorgWarner's broader strategy to focus on profitable growth in its technology-driven product portfolio, particularly in electric and hybrid vehicle solutions.

Operationally, BorgWarner's workforce remained stable, with 216.4 million shares of common stock outstanding as of June 30, 2025. The company continues to invest in research and development, with gross R&D expenditures of $207 million in the second quarter, although net expenditures were lower due to customer reimbursements. The company reported a strong liquidity position with $2.041 billion in cash and cash equivalents, alongside a $2 billion multi-currency revolving credit facility, indicating a solid foundation for future investments and growth.

Looking ahead, BorgWarner anticipates a challenging environment, expecting global industry production to decrease year-over-year in 2025. However, the company remains optimistic about its long-term growth prospects, driven by the increasing adoption of electrified vehicle technologies and stringent global emissions standards. The management is focused on mitigating the impact of declining production through new business-related sales growth and cost recovery actions, aiming for flat sales year-over-year, excluding currency impacts.