Harman raises forecast as European car sales recover
(Reuters) - Harman International Industries Inc (HAR.N) raised its full-year forecast after reporting a 53 percent jump in quarterly profit as a recovering European automobile industry increased demand for its audio systems.
Harman's shares rose nearly 15 percent to a more than six-year high of $100.04 in morning trading on Thursday.
"Carmakers have performed better than our own expectations," Chief Executive Dinesh Paliwal told Reuters.
"We had anticipated they might be almost flat but they actually grew 2 percent production in Europe."
Volkswagen's (VOWG_p.DE) Audi and Porsche reported double-digit volume growth in the United States and China in 2013. Rival BMW (BMWG.DE) also sold a record number of cars in China.
Harman, known for brands such as JBL and Harman Kardon, is growing its presence in the mid-market car segment in addition to its traditional focus on luxury brands, and this helped the company in the second quarter.
"Volkswagen, Mercedes C class, Fiat FIA.MI, Chrysler, these are the ones where we are seeing tremendous growth, because people are finding embedded systems to be a better deal than a handheld device."
Paliwal said he expects the recovery to stay due to strong sales in the United States and China.
Harman gets about 80 percent of its revenue from the United States and Europe.
The company's sales in Brazil, China, India and Russia rose 50 percent in the quarter. Paliwal said he did not expect to pull back investments from these markets.
Harman's audio systems will be used in the Sochi Winter Olympics in Russia and the football World Cup in Brazil.
Harman said it expects adjusted earnings of about $4.16 per share on revenue of about $5.1 billion for the year ending June.
The revised forecast is above analysts' expectations of earnings of $3.98 per share on revenue of $4.85 billion.
The company in August forecast adjusted earnings of about $3.85 per share on revenue of about $4.7 billion.
Revenue in Harman's infotainment business jumped 28 percent to $691 million in the quarter ended December 31, accounting for about 52 percent of total revenue.
The unit provides integrated navigation, entertainment and communication systems to carmakers.
Harman's net income rose to $72 million, or $1.03 per share,
from $47 million, or 68 cents per share, a year earlier.
Excluding items, the company earned $1.09 per share.
Revenue rose 26 percent to $1.33 billion.
Analysts on average had expected earnings of 95 cents per share on revenue of $1.24 billion, according to Thomson Reuters
Harman's shares were up 13 percent at $98.88 in midday trading. They have gained 77 percent since January 2013 when the company reported weak results.
(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Saumyadeb Chakrabarty and Sriraj Kalluvila)