BorgWarner Inc. reports strong 2025 results with $14.3 billion in sales, strategic initiatives, and a positive outlook for 2026.

BorgWarner Inc. delivered a solid performance in 2025, showcasing an increase in net sales and earnings, despite challenges in its battery business segment. The company's strategic initiatives, particularly in light vehicle electrification and the introduction of innovative products, indicate a commitment to long-term profitable growth. With a robust outlook for the upcoming year, BorgWarner positions itself favorably in the evolving automotive and power generation markets.

Financial Performance

In 2025, BorgWarner reported approximately $14.3 billion in net sales, reflecting a year-over-year increase of $200 million. This growth was primarily driven by a 23% rise in light vehicle electrified product sales, underscoring strong demand for hybrid and battery electric vehicle (BEV) components. However, the company faced challenges in its battery segment, leading to only modest organic sales growth of about 1.6% when excluding this decline.

Key metrics from the earnings call include:

• Adjusted operating margin: Increased by 60 basis points to reach 10.7%.
• Earnings per share (EPS): Grew by 14% year over year, highlighting the company's improved profitability.
• Free cash flow: Surged to over $1.2 billion, marking a 66% increase compared to 2024, with more than 50% returned to shareholders through dividends and share repurchases.

Despite the challenges in the battery segment, which created a 150 basis point headwind to sales growth, the company managed to enhance its overall financial profile, demonstrating resilience and strategic foresight.

Strategic Initiatives

BorgWarner's strategic initiatives are focused on expanding its product portfolio and market reach. In 2025, the company secured a record number of new product awards, particularly in its foundational and electrified product lines. Highlights include:

• Conquest Award for supplying a variable turbine geometry turbocharger to a major European OEM for a hybrid electric vehicle platform.
• A contract with a North American OEM to provide an 800-volt secondary Integrated Drive Module (IDM) and generator module for range-extended electric vehicle trucks.
• A new battery management system selected for expanded use in passenger cars and light commercial vehicles.
• An electric cross differential program designed for a 48-volt system with a leading Chinese OEM.

Moreover, BorgWarner announced a master supply agreement with TurboCell, a subsidiary of Endeavor, to supply a modular turbine generator system for the data center market. This innovative product is expected to generate over $300 million in sales during its first year of production, beginning in 2027. The turbine generator system leverages BorgWarner's advanced manufacturing capabilities and is positioned to meet the growing demand for on-site power generation solutions.

Future Outlook

Looking ahead to 2026, BorgWarner projects sales in the range of $14.0 to $14.3 billion, reflecting a slight decline from 2025 levels as the company navigates market fluctuations and challenges in the battery segment. The guidance anticipates a 200 million benefit from favorable foreign currency exchange rates, but an overall organic sales decline of 1.5% to 3.5% is expected due to continued headwinds in the battery market.

Management's expectations for 2026 include:

• Adjusted operating margin: Projected between 10.7% and 10.9%, maintained despite anticipated sales declines.
• EPS growth: Expected to be in the range of $5 to $5.20 per diluted share, representing a 4% increase at the midpoint compared to 2025.
• Free cash flow: Anticipated between $900 million and $1.1 billion, reflecting increased capital spending for product launches and ongoing operational investments.

BorgWarner remains focused on enhancing its earnings power while investing in new technologies, including innovations in battery cooling plates and other electrification solutions. The company’s robust pipeline of new business awards and product launches is expected to support long-term growth and profitability.

Conclusion

Overall, BorgWarner Inc.'s performance in 2025 illustrates the company's ability to adapt and thrive in a dynamic market landscape. With strong financial metrics, strategic partnerships, and an innovative product portfolio, the company is poised for continued success in 2026 and beyond. By focusing on key growth drivers and maintaining a disciplined approach to capital allocation, BorgWarner is committed to delivering value to its shareholders while navigating the challenges of the automotive and power generation industries.

As BorgWarner moves forward, its strategic initiatives and strong financial foundation will likely position it for sustained growth and leadership in the electrification and power generation sectors.