Johnson Controls profit soars as auto recovery lifts revenue, buys stake in Korean battery co.

Auto recovery lifts Johnson Controls 3Q net income

NEW YORK — A recovery in car and truck production helped Johnson Controls Inc. more than double its net income in the fiscal third quarter, the maker of automotive batteries and building climate-control systems said Friday.

But its shares sank after the company narrowed its full-year profit outlook, setting its projection below Wall Street expectations.

Johnson Controls, based in Milwaukee, said higher auto production and new vehicle launches reversed a money-losing quarter in its automotive business last year. Automakers have ramped up auto production this year, with sales of new cars and trucks up 17 percent so far in 2010 compared with a dismal 2009.

The company also raised its forecast for North American automotive production for its fiscal year ending in September to 11.4 million vehicles. That’s up from its previous forecast of 10.9 million vehicles.

Several companies that supply automotive parts have been reporting stronger financial health in recent months following a dismal 2009 that saw deep cuts in automotive production, factory closures and bankruptcies. On Thursday, parts supplier Gentex Corp. said its quarterly profit nearly tripled due to improved auto production.

Separately, Johnson Controls said it agreed to boost its stake to 90 percent from 50 percent in a South Korean joint venture that manufactures automotive batteries. Johnson Controls will pay $90 million to acquire the bigger stake in Delkor Corp., which was previously a joint venture with the company’s former chairman and other shareholders.

Johnson Controls said net income in the quarter ended June 30 rose to $418 million, or 61 cents per share, from $167 million, or 26 cents per share, in the same period last year.

Excluding one-time items, the company earned 54 cents per share, missing analyst expectations by a penny per share.

Revenue rose 22 percent to $8.54 billion. Sales in its automotive segment, which makes vehicle interiors, rose 43 percent to $4.2 billion. Its power solutions segment, which makes lead-acid and hybrid vehicle batteries, posted a 30 percent increase in sales to $1.1 billion.

Sales rose a more modest 2 percent to $3.2 billion in its division that supplies heating, ventilation and air conditioning systems for buildings.

Analysts surveyed by Thomson Reuters expected net income of 55 cents per share on $8.48 billion in total revenue, on average. Such estimates typically exclude one-time items.

The company narrowed its earnings outlook for 2010, saying it now expects to earn $1.95 per share for the year. Previously, it expected earnings in a range of $1.90 to $1.95 per share. It left its revenue guidance unchanged at $33.5 billion.

Analysts expected higher earnings of $2 per share for the year on $33.77 billion in revenue.

Shares dropped $1.37, or 4.5 percent, to close at $29.11 Friday after falling more than 8 percent earlier in the session.