DETROIT - Johnson Controls Inc's quarterly profit surged on cost cuts and improving auto production, but the company stood by a 2010 forecast that trails Wall Street expectations, sending its shares down nearly 5 percent.

The world's largest maker of car interiors backed its forecast for improving sales and earnings in its new fiscal year, bolstering confidence the U.S. auto industry had seen the trough of a bruising downturn that pushed major U.S. vehicle makers and parts suppliers into bankruptcy earlier this year.

Earlier in October, the company forecast fiscal 2010 profit of $1.35 to $1.45 per share, compared with the fiscal 2009 loss of 57 cents per share. It sees sales rising 9 percent to about $31 billion in the fiscal year.

Analysts expect Johnson Controls to earn $1.54 per share on sales of $31 billion according to Thomson Reuters I/B/E/S.

We are looking at markets in a very realistic matter, Johnson Controls Chief Executive Steve Roell said on a conference call with analysts when asked about the company's outlook for 2010.

We just want to see where the consumer is and if we see stronger demand, then we hope you're right (and) we hope we are overly conservative right now.

One of the stronger auto parts makers, Johnson Controls is gaining market share from distressed companies after several large competitors such as Lear Corp declared bankruptcy in 2009 in the wake of massive production cuts by automakers.

Johnson Controls expects North American auto production of 9.8 million vehicles in 2010, up from about 8.6 million in 2009. The company has said it can break even at 8.3 million units of vehicle production in North America as a result of job reductions and other cost cuts.

For the fourth quarter that ended Sept. 30, net income rose to $300 million, or 47 cents per share, from $16 million, or 3 cents per share, a year earlier.

Revenue fell 15 percent to $7.9 billion.

Excluding one-time items, Johnson Controls earned 52 cents per share. On that basis, analysts on average had expected the Milwaukee-based company to earn 51 cents per share on sales of $7.8 billion, according to Thomson Reuters I/B/E/S.

The company's auto parts sales declined 14 percent to $3.5 billion in the fourth quarter, but the business returned to profitability due to aggressive cost cuts over the past year.

Building controls' sales, which include systems and service contracts, fell 16 percent to $3.3 billion. Sales in the battery business were down 17 percent at $1.1 billion.

The company, which is retrofitting New York's landmark Empire State Building to reduce energy use, forecast U.S. commercial construction would begin to recover and government stimulus-funded projects should begin to have a meaningful impact on revenue in the second half of 2010.

Johnson Controls shares were down 4.7 percent, or $1.26, at $25.01 in midday trading on the New York Stock Exchange. (Reporting by Soyoung Kim; editing by Derek Caney and Andre Grenon)