A strategy of diversification designed to reduce dependence on auto industry earnings paid off as Johnson Controls announced 2006 fourth quarter operating income rose 16% to $505m, up from last year’s $436m.
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Income from continuing operations was $368m versus $292m, an increase of 26%. Sales totalled $8.2bn, up 18% from $6.9bn in 2005.
Fourth-quarter earnings per share increased 24% to $1.86, compared with $1.50.
For the 2006 fiscal year, sales rose 17% to $32.2bn from $27.5bn. Income from continuing operations increased 36% to $1.0bn from $757m due to higher operating income, a lower 2006 tax rate and non-recurring tax benefits. Diluted earnings per share from continuing operations in 2006 were $5.25 versus $3.90.
While Johnson’s building and power solutions divisions recorded healthy rises, sales at its vehicle interior ‘experience’ division were off 11% to $4.0bn, due primarily to lower North American vehicle production volume. North America sales were 19% lower reflecting the overall market and unfavourable light truck exposure. European interiors sales were down 3% in the quarter, in-line with overall production levels.
Operating income declined a steep 46% to $112m from $206m. Higher margins in Europe resulting from improvements in operational efficiencies were more than offset by the effects of lower volumes in North America and Japan.
As announced on 9 October, the supplier expects a sales increase of approximately 6%, to $34bn, in 2007. Earnings from continuing operations are estimated to increase 14%, to about $6.00 per share. For the first quarter of 2007, the company expects earnings from continuing operations of $0.80 – $0.85 cents per share.
