* Sees FY 2012 EPS $2.85 to $3 vs Street view $3.10
* Sees FY 2012 sales $44.2 bln vs Street view $44.6 bln
* Shares up about 5.8 pct
By Nick Zieminski
NEW YORK, Oct 12 Johnson Controls Inc
said on Wednesday it expected profits to increase by 20 percent
in its 2012 fiscal year despite weaker-than-expected economic
growth and auto production, and its shares rose about 5.8
The company's fiscal-year forecast was slightly below
recently-lowered Wall Street estimates, but analysts and
investors called the company's guidance conservative.
The maker of auto interiors and batteries and building
efficiency systems would have set higher earnings per share
targets, but expectations for economic growth and auto
production have come down in recent weeks, Chief Executive
Steve Roell said.
Roell described the economic environment as mixed but said
in an interview the consumer sentiment that drives many of the
company's markets could revive quickly.
"If we just had some general certainty in the tone of the
economy and the political environment, there's the opportunity
for very good growth in the next three years," Roell said.
"We've just got to get through this period of time."
When gasoline prices recently retreated, many consumers
quickly shifted preferences from passenger cars to pick-up
"It shows you how quickly the American mindset can change
from a consumer standpoint," Roell said.
The company forecast fiscal 2012 earnings of $2.85 to $3
per share, a 20-percent increase from expected 2011 levels at
the midpoint, on sales of $44.2 billion. The sales target would
mean a rise of 9 percent from fiscal 2011.
Analysts on average were forecasting the Milwaukee-based
company would earn $3.10 a share on revenue of $44.6 billion in
fiscal 2012, which began this month. Estimates have come down
in recent weeks, with several analysts cutting their forecasts
in the past week. Analysts have cited weaker North American and
European economies, lower auto production than previously
expected, and a still-weak U.S. construction market.
The 2012 forecast "was in line with the buyside
expectations," said RJ Bukovac, principal with William Blair &
Co, which holds Johnson Controls shares. "It's conservative in
light of the strengthening dollar and some softening in the
automotive outlook, especially outside the U.S."
Bukovac said China's auto market was cooling and
expectations for non-residential construction have come down in
recent months, but Johnson Controls is gaining market share
with its building efficiency systems. He said the company,
which set a capital spending target of $1.7 billion for fiscal
2012, was investing appropriately in high-margin areas like its
Johnson Controls typically offers conservative guidance at
the start of its fiscal year, analysts say. In past years, its
full-year earnings have consistently topped the range the
company introduced at the start of the year.
The company said it expects margin improvements in all
three of its businesses -- Automotive Experience, Power
Solutions and Building Efficiency -- for 2012. It expects
automotive production in 2012 to be higher in North America and
China, and relatively flat in Europe.
It forecast production of 13.7 million vehicles in North
America in fiscal 2012, up almost 10 percent from the previous
year and about in line with industry forecasts. It estimated
production of 20.1 million vehicles in Europe, up slightly, and
16.5 million in China, up 8 percent.
It forecast less than 2 percent growth in non-residential
construction in the United States and Europe but stronger
growth in Asia, Latin America and the Middle East, but
executives stressed that new construction accounts for less
than 20 percent of segment sales, which are driven by services
and demand retrofit.
It said a weaker euro would hurt results in its auto
interiors business, its biggest, but forecast 21 percent growth
in China, where it has 44 percent of the seating market.
China will also help its battery business, where sales are
expected to rise 11 percent to 13 percent in fiscal 2012. The
company forecast a 9 percent to 11 percent sales increase in
its building efficiency business.
Johnson Controls also announced a preliminary fourth-quarter
profit that was short of estimates.
The company, slated to report fourth-quarter results on Oct.
27, said it expects adjusted profit of 75 cents a share on
sales of $10.7 billion. Analysts, on average, were expecting 78
cents a share on sales of $10.5 billion, according to Thomson
Johnson Controls shares rose $1.75 to $31.89 in late
trading on the New York Stock Exchange.