Johnson Controls outlook disappoints, shares drop

Fri Jan 18, 2013 10:10am EST

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(Reuters) - Johnson Controls Inc (JCI.N) forecast a smaller-than-expected profit for the current quarter due to lower auto production in Europe, sending the company's shares down more than 3 percent.

The company, the largest U.S. auto parts supplier, forecast a fiscal second-quarter profit of 40 cents to 42 cents per share, short of analysts' expectations of 51 cents, according to Thomson Reuters I/B/E/S.

"The forecast reflects the current European automotive production environment and short-term delays in flexing labor in the region," the company said on Friday.

Johnson Controls' stock was down 3.3 percent to $30.91 on the New York Stock Exchange. Shares fell even as the company posted a slightly better-than-expected profit in its fiscal first quarter.

The company in October said weaker business in Europe would reduce its first-half profit significantly. Restructuring actions initiated in the latter part of 2012 are expected to boost profit in the second half.

Johnson Controls, which makes car interiors and batteries, maintained its fiscal 2013 outlook of higher profit and sales.

Citi analyst Itay Michaeli said the second-quarter forecast suggested Johnson Control would earn 65 percent of its annual profit in the second half of the year, about 10 percentage points higher than in the last two years.

"Given the current demand environment and the operational pressures the company is facing in Europe, we believe the risks around this outlook are elevated and investors could avoid shares in the near term as this is discounted," Baird analyst David Leiker said in a research note.

In its fiscal first quarter, ended December 31, Johnson Controls earned $354 million, or 52 cents per share, compared with $424 million, or 62 cents per share, a year earlier. Analysts expected 51 cents.

Revenue rose marginally to $10.42 billion. Analysts on average had estimated revenue of $10.26 billion.

(Reporting by A. Ananthalakshmi in Bangalore and Deepa Seetharaman in Detroit; Editing by Maju Samuel)

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