Harman International Industries Inc. (HAR:US), a maker of car infotainment systems, fell the most in 17 months after forecasting 2013 profit would fall short of analysts’ estimates because of the automotive slump in Europe.
The shares (HAR:US) dropped 9.1 percent to $44.78 at the close in New York for the biggest drop since August 2011. The shares rose 15 percent for the 12 months ended yesterday compared with 14 percent for the Standard & Poor’s 500 Index.
Harman forecast fiscal 2013 profit of $2.70 to $2.90 a share, according to a statement. That compared with $3.36, the average of seven analysts’ estimates in a Bloomberg survey and $3.67 to $3.92 a share in an Aug. 10 forecast. Harman said it will cut 500 jobs and may sell or close a factory in Europe, eliminating 500 more jobs. The company said the job cuts already planned will reduce expenses $30 million to $35 million annually starting in fiscal 2014.
“Rebalancing our workforce is a difficult, but necessary, step that Harman is implementing to deliver improved financial results through the European economic and automotive cycle recovery,” Harman Chief Executive Officer Dinesh Paliwal said in the statement. The European automotive market is in its worst slump in 19 years.
The slowdown probably was driven by December production cuts at European luxury-auto makers, David Leiker, a Robert W. Baird & Co. analyst in Milwaukee, said in a research note today. Leiker rates the shares outperform. Harman has said its gear is in 80 percent of luxury vehicles sold.
Profit in the three months ended Dec. 31 was 59 cents a share, down from 83 cents a year earlier. The average estimate of seven analysts surveyed by Bloomberg was for a profit of 85 cents. Harman, based in Stamford, Connecticut, supplies equipment that combines music, maps and other information in automobiles.
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