Johnson Controls profit weak; outlook cut
(Reuters) - Johnson Controls Inc (JCI.N) posted a lower-than-expected quarterly profit on Thursday due to weak demand for replacement batteries and higher costs, and cut its outlook for the current period.
"Sluggish demand in some of our key markets along with a much weaker euro resulted in lower top-line growth than we expected," Chief Executive Officer Stephen Roell said.
He also cited weak demand in the auto replacement market for batteries and said profits were hurt by record high prices for the spent battery cores Johnson Controls uses in recycling lead. Roell does not expect that combination to continue past the current quarter.
Citing continued softness in its global markets and expectations for a lower euro, Johnson Controls now expects earnings this quarter to be flat to up 5 percent. That is down from earlier expectations for double-digit improvement.
Johnson Controls said restructuring initiated in the third quarter is targeted to improve profits in the building efficiency and auto units, but added that additional restructuring actions are expected in the fourth quarter.
RBC Capital Markets analyst Joseph Spak said in a research note that the results were "worse than feared." He said the outlook implied a range for the fourth quarter of 75 to 79 cents a share, compared with an analyst consensus of 89 cents.
"It's not a pretty quarter all around," he said, citing softer-than-expected profit margins in the automotive and power solutions units.
Net income in the third quarter ended on June 30 rose almost 17 percent to $417 million, or 61 cents a share, from $357 million, or 52 cents a share, a year earlier.
Excluding one-time items, Johnson Controls earned 64 cents a share, 2 cents below what analysts polled by Thomson Reuters I/B/E/S had expected. Analysts said a lower-than-expected tax rate contributed to the results.
Sales rose 2 percent to $10.58 billion, below the $10.81 billion Wall Street had forecast.
"While we think investors were apprehensive about a possible miss, we think the results are a bit worse than feared," Jefferies analyst Peter Nesvold said in a research note. "This downward revision is a clear step back," he added about the fourth quarter outlook.
(Reporting by Ben Klayman in Detroit; Editing by Chizu Nomiyama; Editing by Lisa Von Ahn)
- Tweet this
- Share this
- Digg this