Johnson Control profit misses, cuts forecast

Jan 19 (Reuters) - Auto parts supplier Johnson Controls Inc (JCI.N) posted a weaker-than-expected first-quarter profit and cut its 2012 earnings forecast, citing lower car production in Europe and weak aftermarket demand for batteries.

The maker of auto interiors and batteries and building efficiency systems, whose shares were down more than 8 percent in early trading, said it expects second-quarter earnings far below Wall Street's expectations.

"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 warned of lower residential heating, ventilation and air-conditioning demand, and cited continued start-up costs at a North American metals plant and lower battery volumes in the replacement market due to the warmer winter.

It also said it was now eying an indefinite shutdown of its Shanghai battery plant. The company said talks with the Chinese government about the future of the plant are continuing.

The Chinese battery 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.

"JCI's company-specific challenges seem to be spreading beyond European auto margins," J.P. Morgan analyst Himanshu Patel said in a research note.

The company's 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.

Analysts had expected earnings of 62 cents a share on revenue of $10.52 billion, according to Thomson Reuters I/B/E/S.

J.P. Morgan's Patel, who has an "overweight" rating on the stock, cited Johnson Controls' disappointing margins in the quarter in the auto and building efficiency divisions.

Johnson Controls said it expects second-quarter earnings of 52 cents to 54 cents a share compared with the 70 cents analysts had forecast.

Johnson Controls expects a full-year profit of $2.70 to $2.85 a share, down from its earlier forecast of $2.85 to $3 a share.

The company expects auto production in Europe for the year to be 19.6 million vehicles, down 3.5 percent from its previous forecast of 20.1 million.

Johnson Controls' shares were off 8.2 percent, or $2.92, to $32.66 in early trading on the New York Stock Exchange.

(Reporting by A. Ananthalakshmi in Bangalore and Ben Klayman in Detroit; Editing by Mark Porter)