Johnson Controls Inc. (JCI) said Tuesday its automotive and building-services units will recover during its 2010 fiscal year amid higher new vehicle orders and federally funded infrastructure projects.

The Milwaukee-based company said diluted earnings for the 2010 fiscal year will be between $1.35 and $1.45 a share on revenue of $31 billion. Analysts had expected earnings of $1.44 a share and $30.15 billion in revenue.

Revenue in the auto business will grow 13% while its automotive battery unit will report a 17% increase and building services will climb 3%.

Despite the positive forecast, shares slipped 3% in earlier trading as analysts raised concerns about the lack of short-term growth potential. They also cited the company's order backlog that was cut in half to $2.5 billion as auto makers cancel or delayed product launches.

Automotive production in North America and Eastern Europe won't return to 2008 levels until 2012, said Johnson Controls' vice president of the automotive unit, Beda Bolzenius.

"The main challenges we see for the global automotive business going forward is the slow recovery of volumes," Bolzenius said.

Johnson Control's forecast underscores the likelihood that the recovery in automotive industry and the U.S. economy will be slow despite federal incentives designed to ease consumer concern.

The company said it expects the commercial building industry should to begin recovery in the U.S. beginning in the second half of 2010. The residential heating and cooling markets will also improve after more than two years of significant declines.

Nearly half of the Milwaukee-based company's revenue comes from producing commercial building equipment and services, but it also derives well over a third from making automobile seats, interior systems and batteries.

For the fourth-quarter, which ended Sept. 30, earnings will be between 40 cents and 42 cents a share with all automotive regions positing a profit. The mean earnings estimate of analysts surveyed by Thomson Reuters was 39 cents a share. The company will release its fourth-quarter results Oct. 27.

On the positive side, Johnson Controls Chief Executive Stephen Roell said the company has succeeded in taking aggressive cost-cutting steps that included shutting 30 plants and trimming 15,000 jobs primarily in the automotive business.

"We can make money at anything above 8.3 million units," Roell said. "That's an accomplishment. If you go back in time, that number was probably close to 11 to 12 million units but with the restructuring that we've done we feel that we can make money at 8.3. In Europe, the break-even is now 14.3 million units."

-By Jeff Bennett; Dow Jones Newswires; 248-204-5542; jeff.bennett@dowjones.com

(Nathan Becker contributed to this story.)