Johnson Controls Inc. (JCI - Free Report) announced that it plans to stop production at its car upholstery plant located in Roudnice nad Labem in Czech Republic by Sep 2014. Sluggish sales in the European automotive industry in the recent quarters led to this decision.
About 1,635 employees will lose their jobs due to the closure. However, Johnson Controls expects to employ around 300 of these workers in other Czech Republic plants including Ceska Lipa, Straz pod Ralskem and Mlada Boleslav.
The company has also allotted a special team to assist the workers in finding new jobs and train them adequately over the next 15 months. In addition, the company will provide compensatory packages to the employees.
Johnson Controls also intend to construct a smaller factory in Roudnice, which will be producing car seat covers and additional spare parts. This plant will provide an employment opportunity to about 30 to 50 workers of Roudnice plant.
Johnson Controls posted a 23.6% decline in adjusted earnings to 42 cents per share in the second quarter of fiscal 2013 ended Mar 31, 2013 from 55 cents in the same quarter of prior fiscal year. However, earnings were in line with the Zacks Consensus Estimate. Net income declined 24.1% to $287.0 million from $378.0 million in the second quarter of fiscal 2012.
Revenues in the quarter declined 1.3% to $10.43 billion, but marginally exceeded the Zacks Consensus Estimate of $10.39 billion. The decline was attributable to lower revenues in the company’s Automotive Experience and Building Efficiency segments.
Johnson Controls reiterated its guidance to generate earnings between $2.60 and $2.70 per share in fiscal 2013, which is higher than $2.56 in fiscal 2012. For the third quarter of fiscal 2013, the company expects earnings per share of 75 cents.
Johnson Controls carries a Zacks Rank #2 (Buy). Other stocks that are also performing well in the industry where JCI operates include Visteon Corp. (VC - Free Report) , WABCO Holdings Inc. (WBC - Free Report) and Magna International Inc. (MGA - Free Report) . Visteon carries a Zacks Rank #1 (Strong Buy), whereas WABCO and Magna carry a Zacks Rank #2 (Buy).