Johnson Controls Inc. (JCI), the largest U.S. auto-parts maker, fell the most in more than two months after saying profit will trail analysts’ estimates because European vehicle demand is falling and labor costs aren’t.
Johnson Controls’ shares fell 3 percent to $31.01 at the close in New York, the biggest one-day decline since Nov. 7. They have gained 1.1 percent this year after dropping 1.9 percent last year and 18 percent in 2011.
Net income for the quarter ending March 31 will be 40 cents to 42 cents a share, Milwaukee-based Johnson Controls said in a statement today. The average estimate of 21 analysts surveyed by Bloomberg was for a profit of 52 cents a share.
“Given the current demand environment and the operational pressures the company is facing in Europe, we believe the risks around this outlook are elevated and investors could avoid shares in the near term as this is discounted,” David Leiker, a Milwaukee-based analyst with Robert W. Baird & Co., wrote in an investor note. He rates the shares neutral.
Automakers, including General Motors Co. (GM) and Ford Motor Co. (F), face weaker demand in Europe, which is mired in its worst sales slump in 19 years. Both U.S.-based companies have announced European plant closing as part of efforts to end deficits in the region.
Johnson Controls today also reaffirmed its sales and profit forecast for the fiscal year. The company estimated that earnings per share would be $2.60 to $2.70 on Dec. 19.
Johnson Controls received 51 percent of its $42 billion in revenue last year from its auto parts unit, which makes seats, door panels and infotainment systems. The company also makes auto batteries and equipment for managing building climate and security; such products contributed 35 percent of revenue last year.
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