(Reuters) - Harman International Industries Inc, maker of JBL and Harman Kardon audio systems, forecast full-year profit below market estimates as it spends more to boost production in lower-cost countries.
The company’s shares fell as much as 6 percent in early trading on Thursday.
Harman International, which counts Volkswagen AG (VOWG_p.DE), BMW AG and Toyota Motor Corp among customers, said it would add four production lines in the year ending June 2015.
“We are going to be investing in a new factory in Brazil (and) India, and we will (be) expanding our production in Hungary and China,” Chief Executive Dinesh Paliwal told Reuters.
“We typically spend around 2.5-2.75 percent of sales, and this year we would be (spending) around 3-3.5 percent.”
Harman, which also makes car entertainment systems, said it expects revenue of $6 billion for the year — in line with analysts’ average estimate.
The company forecast an adjusted profit of $5.25 per share, up from $4.41 in the year ended June 30. Analysts on average were expecting a profit of $5.46 per share, according to Thomson Reuters I/B/E/S.
“We expect that our growth in the emerging markets will effectively outperform the rest of the world,” Paliwal said in a conference call.
Revenue in emerging markets grew 31 percent to more than $700 million in the year ended June 30, with China leading growth, Harman said.
The company was restructuring to align with growth markets as well as to manage costs, Paliwal said in a statement. [ID:nBw9y6nCXa]
Selling, general and administrative expenses jumped 24 percent in the fourth quarter ended June 30.
Net income attributable to Harman soared to $43.2 million, or 62 cents per share, from $5.5 million, or 8 cents per share, a year earlier.
Excluding items, the company earned $1.25 per share, ahead of the $1.21 analysts’ expected.
Revenue rose 22 percent to $1.44 billion, more than the $1.39 billion analysts expected.
Harman shares were down 5.2 percent at $105.51 in morning trading on the New York Stock Exchange, after touching a low of $104.48. They had gained 36 percent this year up to Wednesday’s close.
Reporting by Soham Chatterjee in Bangalore; Editing by Joyjeet Das