Johnson Controls 2014 forecast disappoints Wall Street

Wed Dec 18, 2013 2:04pm EST

(Reuters) - Johnson Controls Inc (JCI.N) forecast lower 2014 earnings than analysts were expecting on Wednesday, as it plans to buy and sell assets to reduce dependence on the low-margin automotive sector in favor of its power business.

Shares of Johnson Controls, the largest U.S. auto parts maker, fell 2.6 percent to $50.01 in Wednesday afternoon trading.

The company expects 2014 earnings between $3.15 and $3.30 per share, below the average analyst estimate of $3.31 per share, according to Thomson Reuters I/B/E/S.

The company said it expected revenue of $43.8 billion next year, slightly below the average analyst estimate of $43.87 billion.

Milwaukee-based Johnson Controls makes car interiors and batteries as well as heating, cooling and ventilation systems (HVAC) for buildings.

The company said in October that it would explore strategic options for its loss-making automotive interiors business to focus instead on its automotive battery line and power management systems.

Johnson Controls also sold part of its automotive electronics business this year to Gentex Corp (GNTX.O) for about $700 million.

Sales of the rest of the automotive electronics business, which had been expected, should come by February, Chief Executive Officer Alex A. Molinaroli said in an interview.

"We're within 30 to 60 days of hopefully announcing an agreement, and then going through the process of closing," said Molinaroli, who has worked at the company since 1983 and became CEO in October.

Broadly, Molinaroli said he wants to transform Johnson Controls into a company focused on batteries and HVAC products, and lessen its reliance on the automotive sector.

While the company will slowly move away from the auto sector, it will remain heavily involved in making seats for cars, Molinaroli said.

"It's really the core of our auto business," he said.

In the company's HVAC business, which sells directly to other businesses as well as consumers, Molinaroli said he sees the most growth potential in providing repair services to consumers.

Johnson Controls said it expected sales from its power solutions unit to increase 7 percent to 8 percent in 2014.

Sales from its automotive electronics business are expected to fall 2.5 percent to 3 percent in 2014, and sales from its interiors business are expected to be flat to down 1.5 percent. (Reporting by Mridhula Raghavan in Bangalore and Ernest Scheyder; Editing by Bernard Orr)

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