DETROIT (Reuters) -- Diversified auto parts supplier Johnson Controls Inc. today said its quarterly earnings rose 9.3 percent, but the company lowered its business outlook for the coming year, citing lower automotive production in Europe and weak aftermarket demand for batteries.
In a statement, Johnson Controls said its fiscal first quarter net income was $410 million, or 60 cents a share, up from $375 million, or 55 cents a share, a year ago.
Revenue rose 9 percent to $10.4 billion.
"Our growth in the first (fiscal) quarter is evidence of continued market share gains as we sustainably outperform our underlying industries," CEO Stephen Roell said in a statement. "We took steps to improve our execution and added resources to improve quality and productivity. At the same time, we continued to invest in order to support our global growth and margin expansion opportunities."
The maker of auto interiors and batteries and building efficiency systems also expects second fiscal quarter earnings at 52 cents to 54 cents a share, way below analysts estimates of 70 cents a share. Johnson Controls expects fiscal year profit of $2.70 to $2.85 a share, down from its earlier forecast of $2.85 to $3 a share.
Johnson Controls now expects 2012 European vehicle production to slide 3.5 percent instead of a previous forecast of a 1.5 percent gain.
"While there are some short-term changes to our original 2012 expectations, our primary growth and profitability story is intact," Roell said in the statement.
"We believe actions we have taken to improve our execution and profitability will provide momentum through the balance of the year and beyond. Despite the near-term challenges, we believe Johnson Controls will deliver double-digit earnings increases in 2012."
The company is assuming an indefinite shutdown of its Shanghai battery plant even as talks with the Chinese government continue, it said in a statement.
The plant came under the spotlight late last year after children in Kangqiao area of Shanghai were found to have lead poisoning during medical checks. Johnson Controls halted production at the plant in September because its annual lead quota was reached but expected to restart production in January 2012.
Disappointment on Wall Street
The quarter earnings of 60 cents a share disappointed Wall Street. Analysts had expected earnings of 62 cents a share on revenue of $10.52 billion, according to Thomson Reuters I/B/E/S.
Johnson Controls shares dropped $3.12, or 9 percent, to close at $32.46 in New York Stock Exchange trading Thursday.
"We had expected pressure on JCI's guidance, but the revision appears somewhat worse than we thought," Citi analyst Itay Michaeli said in a research note.
Michaeli, who has a "neutral" rating on Johnson Control's stock, also said the company's European auto production assumption still appeared aggressive even though it was reduced by 3.5 percent.
As part of its reduced full-year outlook, Johnson Controls also warned of lower battery volumes in the replacement market due to the warmer winter.
"JCI's company-specific challenges seem to be spreading beyond European auto margins," J.P. Morgan analyst Himanshu Patel said in a research note.
Automotive News staff contributed to this report.