UPDATE 2-Johnson Controls posts profit, reaffirms 2013 outlook

Tue Apr 23, 2013 9:43am EDT

DETROIT, April 23 (Reuters) - Johnson Controls Inc on Tuesday posted a profit that met Wall Street's expectations and the largest U.S. auto-parts maker reaffirmed its full-year outlook.

Johnson Controls, like much of the auto industry, has been hurt by weak demand in Europe. The supplier's results included a tax charge related to valuation allowances in Germany and Brazil, and a restructuring charge in its European and South American auto interior business.

"Despite a challenging global market, we anticipate stronger profitability in the second half of fiscal 2013 consistent with market expectations," Chief Executive Stephen Roell said in a statement. "Our second-half results will reflect restructuring benefits and improved operating performance."

Net income attributable to Johnson Controls fell 61 percent to $148 million, or 21 cents a share, in its fiscal second quarter, compared with $379 million, or 55 cents a share, in the year-earlier quarter.

Excluding one-time items, the company earned 42 cents a share, in line with what analysts polled by Thomson Reuters I/B/E/S had expected. Morgan Stanley analyst Ravi Shanker said Johnson Controls' profit "steps over a low bar."

Revenue slipped 1 percent to $10.43 billion, just below the $10.48 billion analysts had expected.

In January, Johnson Controls, citing weak auto production in Europe, offered a second-quarter profit forecast far below Wall Street's expectations. It said it would earn 40 to 42 cents a share, while analysts had previously expected 51 cents.

Johnson Controls, which makes car interiors and batteries, said the potential sale of its auto electronics business was in the early stages and it expected to provide an update in the next three to four months. The company said last month it had hired JPMorgan to run the sale process, which could attract bids topping $1 billion.

The Milwaukee, Wisconsin-based company also reaffirmed its profit outlook for the full-year, saying it expects to earn in the range of $2.60 to $2.70 a share. Analysts were expecting $2.59.

Johnson Controls said it was comfortable with Wall Street's consensus for a third-quarter profit of 75 cents a share. Baird analyst David Leiker said the company's fourth-quarter implied forecast is 10 percent above expectations.

In the second quarter, Johnson Controls said sales and orders at its building efficiency business were hurt by soft global demand. Sales fell 3 percent.

The auto unit also saw sales fall 3 percent as higher demand in North America was offset by declines in Europe. Sales in the power solutions business rose 10 percent.

Morgan Stanley's Shanker said the building efficiency was weaker than expected, while the other two units surprised on the positive side.

Johnson Controls' shares were off 15 cents at $33.00 in morning trading on the New York Stock Exchange.