JCI estimates per-share profit will grow to $3.15-3.30 next fiscal year

CEO Alex Molinaroli: "We have a clear vision for our portfolio and our ability to improve profitability,”
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DETROIT (Bloomberg) -- Johnson Controls Inc., the largest U.S. auto parts maker, forecast full-year profit growth that lagged behind analysts’ estimates as the manufacturer predicted limited car-market expansion in Europe.

Earnings per share will total $3.15 to $3.30 for the year ending Sept. 30 on sales of $43.8 billion, Johnson Controls said in a statement. That compared with an average analyst estimate of $3.34 a share profit and revenue of $43.8 billion, according to data compiled by Bloomberg. Net income in fiscal 2013 amounted to $1.71 a share, with revenue at $42.7 billion.

“Over the long term, we have a clear vision for our portfolio and our ability to improve profitability,” CEO Alex Molinaroli, who took over the Milwaukee company on Oct. 1, said in the statement. “We are committed to disciplined capital allocation, and our strong balance sheet gives us the capacity to continue investing in our businesses while meaningfully increasing the cash we return to our shareholders.”

Johnson Controls is reconfiguring the company to focus on its building-efficiency unit, lessening a dependence on the cyclical automotive industry. The company is trying to sell its automotive electronics business and is considering options for its unprofitable auto interiors unit, which makes door and instrument panels.

Industry forecast

Global automotive production will rise in the company’s fiscal year, with an 11 percent jump in China, a 6 percent increase in North America and a 2 percent gain in Europe, Johnson Controls said today.

The European car market, at about a two-decade low, is on track to shrink a sixth consecutive year in 2013. Industry executives are predicting some growth next year, with Allan Rushforth, head of Hyundai Motor Co.’s business in the region, estimating earlier this month that the auto market will expand 3 percent.

Johnson Controls’ interiors unit recorded a loss of $13 million last year, when it accounted for $4.2 billion of Johnson Controls’ $42.7 billion in sales. Electronics represented $1.3 billion.

Interiors business

Revenue at the interiors operation will be unchanged or fall as much as 1.5 percent, while sales at the electronics unit will drop in a range of 2.5 percent to 3 percent, the company said today. Automotive seating revenue will rise 1 percent to 2 percent.

Johnson Controls rose 0.7 percent to $51.32 in New York on Tuesday. The stock has gained 67 percent this year.

The manufacturer said last month that it will increase a stock-buyback program by $3 billion amid greater confidence in the forecast for fiscal 2014 and beyond. Johnson Controls’ total share-repurchase authorization is now $3.65 billion. The company also raised the quarterly dividend by 16 percent to 22 cents a share. The payment will be made on Jan. 6 to shareholders of record as of Dec. 16.

Johnson Controls received 51 percent of revenue from the auto-components division in its last fiscal year. The company also makes equipment for managing building climate and security and provides maintenance of those systems. That business, which accounted for 34 percent of sales in fiscal 2013.

The building-efficiency unit will report revenue growth of 1 percent to 3 percent this year, with the margin at 7 percent to 7.2 percent of sales, Johnson Controls said today.

The power solutions unit, which makes vehicle batteries, contributed 15 percent of Johnson Controls’ revenue last year. That division’s sales in fiscal 2014 will rise 7 percent to 8 percent, with earnings at 16 percent to 16.2 percent of revenue.

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