BorgWarner Inc., a Michigan-based company that supplies turborcharger and emissions systems to the auto industry, recently reported a one-time charge of $411 million, which it is setting aside for future asbestos exposure liability claims.
That’s according to Crain’s Detroit Business, which reports the charge resulted in a net loss in the company’s fourth quarter of $293 million.
Now of course, this might sound like a lot, but consider that the company’s revenue during that quarter rose by more than 6 percent to $2.3 billion, from $2.1 billion just a year earlier. A big part of that was owing to a 20 percent increase in drivetrain division sales. Net revenue for the year is up to $9.1 billion. When you consider this, that $411 million seems far less substantial, especially when noting how many thousands of asbestos injury claims are likely to arise in the coming years. The supplier figured the $411 million by calculating its estimated costs for indemnity and defense of pending and future asbestos-related claims, which could stretch into the next five decades. Continue reading →