Johnson Control Forms JV in India

Johnson Controls Inc. (JCI - Analyst Report) formed a 50:50 joint venture with India-based automotive instrument cluster supplier Pricol Limited that will develop and manufacture instrument clusters, displays and body electronics for both car and motorcycle industry in India. The joint venture, Johnson Controls Pricol Private Limited, has chosen Pricol’s manufacturing plant in Pune as its base.

The joint venture will help Johnson enter a new market segment by gaining access to Pricol’s instrument cluster offerings and customer base for motorcycle manufacturers. On the other hand, Pricol will be able to strengthen its market position in India by taking advantage of Johnson’s cutting-edge product development technology and global customer relationships.

Johnson Controls is a Wisconsin-based supplier of automotive interiors, batteries, and other control equipment. The company functions through three segments: Automotive Experience, Building Efficiency and Power Solutions. Its main competitors include Magna International Inc. (MGA - Analyst Report).

Johnson expects to grow through meaningful acquisitions and its long-term focus on emerging markets, including China. Recently, the company announced that it will acquire 49% stake in Karat Guc Sistemleri Sanayi & Ticaret AS, a Turkey-based distributor of car-batteries. Karat sells batteries including Varta and Energizer brands, both owned by Johnson.

The company also raised the prices of lead-acid batteries by 8% in the U.S. and Canada in order to support increased investments for meeting environmental, health and safety standards. The new price will be applied for orders starting on May 1, 2012.

The Zacks #3 Rank (Hold) company posted a 9% increase in profit to $410 million or 60 cents per share in the first quarter of its fiscal 2012 from $375 million or 55 cents per share in the same quarter of prior fiscal year. However, the profits were lower than the Zacks Consensus Estimate by 2 cents per share.

The higher profits were attributable to higher earnings in the company’s Power Solutions and Automotive Experience segments. Net sales in the quarter rose 9% to $10.4 billion, which was slightly lower than the Zacks Consensus Estimate of $10.5 billion.

Johnson Controls lowered its earnings guidance for the second quarter and the fiscal year 2012 due to decline in automotive production in Europe, weak demand for aftermarket battery due to weather-related factors, indefinite shut down of Shanghai, China battery plant and lower demand for residential Heating, Ventilation and Air-Conditioning (HVAC).

The company anticipates earnings in the second quarter of fiscal 2012 to be 52 cents–54 cents. For the fiscal year, the company lowered its earnings guidance to $2.70–$2.85 compared with the earlier guidance of $2.85–$3.00.