UPDATE 1 -Johnson Controls seeks to curtail auto interiors unit


(Corrects 4th paragraph to show interiors unit lost $13 millionin year, not quarter; corrects percentage of interiors'contribution to total revenue)

Oct 29 (Reuters) - Johnson Controls Inc said onTuesday that it will curtail its large automotive interiorsbusiness, which lost money in the most recent quarter, and focusunder its new chief executive on the company's faster-growingsegments.

Milwaukee-based JCI said it would "explore strategicoptions" for its automotive interiors business, which ChiefExecutive Alex Molinaroli said will not be eliminated.

Wall Street cheered the move, driving JCI's stock up as muchas 7 percent to a 12-month high of $45.70. In afternoon tradingon the New York Stock Exchange, JCI shares were trading at$44.97, up 5 percent.

Its automotive interiors business lost $13 million on totalsales of $4.2 billion in JCI's fiscal year 2013, JCI said in itsearnings report. Automotive interiors' revenue represented 10percent of JCI's yearly sales.

JCI's fiscal fourth-quarter earnings met analysts'expectations with its report of a record net profit. The companysaid earnings would rise 30 percent in the next quarter, thefirst of its fiscal 2014.

In a conference call with analysts on Tuesday, Molinarolisaid there will not be a single "event" in which the automotiveinteriors business would be cut.

"It will be more of an ongoing process for us," saidMolinaroli, who four weeks ago replaced Steve Roell as the CEOof the company, whose businesses range from auto parts to powermanagement systems. JCI has about 168,000 employees.

JCI Chief Financial Officer Bruce McDonald said, "We're notplanning on winding down the interiors business," adding thatthe company has some plans in the works.

"We have some sticks in the fire. But we are not planning onshutting it down," McDonald said.

As the company curbs its automotive interiors business, itwill add focus on areas that Molinaroli said have the bestchances for growth - its automotive battery line and its powermanagement systems for buildings.

The company's automotive seating business is not part of its"strategic review" of automotive interiors that Molinaroli willconduct.

Seven months ago, Johnson Controls announced it would sellthe automotive electronics part of its business. On Tuesday, thecompany said it will announce details of the sale of theremaining parts of its electronics business by the end ofDecember.

Molinaroli and McDonald said they were making theannouncement on Tuesday to give JCI's employees in the interiorsbusiness time to prepare for the changes.

McDonald said the three parts of JCI's automotive business -seating, interiors and electronics - were put together to servecustomers that wanted all three areas together as a source fortheir vehicles. But now, sourcing for auto parts is moreconcentrated on the component level.

"The need to have those three product lines doesn't existanymore," McDonald said.

Molinaroli said producing all three of those auto productlines is too complex to continue.

"Whether we divest of that business, or do something elsewith it, I don't think it will be harmful to our seatingbusiness," Molinaroli said.

JCI reported a company record net income of $657 million forits fiscal fourth quarter versus $526 million a year ago,excluding restructuring and non-recurring items in the 2013 and2012 fiscal fourth quarters. Its quarterly revenue was $11.05billion, up from $10.39 billion a year earlier.

Both quarterly revenue and diluted earnings per share of 95cents matched expectations of analysts polled by Thomson ReutersI/B/E/S.

JCI expects next quarter's earnings to rise 30 percent, or35 percent adjusted for the sale of HomeLink, an automotiveelectronics business sold in late September to Gentex Corp.

HomeLink is a vehicle-based system allowing drivers toremotely manage garage doors, home locks, lighting and othersecurity systems. JCI sold it to Gentex for $700 million.

Analyst Ravi Shanker of Morgan Stanley said the fiscalfirst-quarter earnings projections appeared to be conservative.JCI's fiscal first quarter runs from October to December.

For the full fiscal year 2013, JCI's revenue was $42.73billion, up from $41.955 billion the previous year.

(Reporting by Bernie Woodall; Editing by Maureen Bavdek, JanPaschal and Dan Grebler)

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