BorgWarner Inc.

Despite the severe production unpredictability and inflationary pressures, BorgWarner performed strongly and delivered an all-around beat in the last quarter. The company’s sales were particularly strong relative to the overall industry and this growth was significantly aided by their bed-related revenues. Its solid free cash flow allowed them to keep investing in non-organic projects that would secure their future while simultaneously paying out cash to their shareholders. BorgWarner declared its intention to cut its absolute Scope 3 emissions by at least 25% by 2031. The Scope 3 target was formally submitted to SBTi for certification together with their goal of achieving 85% absolute Scope 1 and Scope 2 emissions reductions by 2030. These science-based goals aim to create a world with zero carbon emissions for everyone, consistent with moving forward or accelerating the electrification process. They further improved NewCo’s margins and strengthened its position in the passenger car market. Looking ahead to 2023, they intend to focus on maintaining strong high single-digit revenue outperformance to secure growth and financial strength for the foreseeable future. We give BorgWarner Inc. a ‘Hold’ rating with a revised target price.