UPDATE 1-JCI reports narrow loss on charges, next half year weak

Tue Oct 30, 2012 9:37am EDT

* Next six months to show softer sales

* Fiscal 2013 earnings flat to slightly higher

* Europe auto parts sales down 15 percent in quarter

Oct 30 (Reuters) - Johnson Controls Inc said on Tuesday that weaker business in Europe would cut company profits in the next half year, and it reported a quarterly loss linked to restructuring and accounting charges.

JCI warned that the first half of its fiscal 2013 would show "earnings significantly lower than the same period in 2012", followed by "higher year-over-year earnings in the second half of the year".

JCI said its 2013 full fiscal year would show "earnings to be flat to slightly higher than 2012".

The company's fiscal year runs from Oct. 1 to Sept. 30. The quarterly results reported are for JCI's fourth quarter.

Weaker sales in Europe along with the restructuring and accounting charges in the quarter led to a net loss of $8 million, or 1 cent per share, compared with a profit of $234 million, or 34 cents per share, a year earlier.

Excluding one-time items, JCI earned 77 cents per share, narrowly beating analysts' average expectation of 75 cents per share, according to Thomson Reuters I/B/E/S.

"In response to the challenges in some of our key markets, we recently announced restructuring actions," said Chief Executive Stephen A. Roell.

"We believe these initiatives better align resources with our current strategies and will help us to increase profitability in what we expect will be a low-growth environment next year."

Restructuring charges in the quarter were $245 million, or 33 cents per diluted share, and a non-cash mark-to-market charge of $447 million, or 40 cents per diluted share was taken, on changes in pension and retiree medical benefits.

In the 2013 fiscal year, JCI said it expects a negative effect from currency exchanges and a higher effective tax rate of 20 percent because a larger share of its earnings will come from the United States.

In the quarter ended Sept. 30, revenue was $10.39 billion, down from $10.79 billion a year earlier. The maker of auto parts and power management systems fell short of analyst revenue expectations of $10.84 billion, according to Thomson Reuters I/B/E/S.

Sales in the company's automotive business fell 2.5 percent to $5.01 billion from $5.14 billion. Profit in the automotive business fell 34 percent to $159 million. Profit in North America and Asia offset a European loss of $68 million, compared to a profit of $75 million a year earlier.

In JCI's building efficiency business, sales fell 7 percent to $3.82 billion, while income from the segment grew by 15 percent to $327 million. Higher sales in Asia offset lower sales in North America, Europe and the Middle East, the company said.

In JCI's power solutions business, sales were unchanged at $1.56 billion, and income rose 11 percent to $240 million.

The company said it would provide further guidance on its fiscal 2013 expectations at an analyst meeting on Dec. 19.

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