Johnson Controls has reported sales for the quarter ended June 30, 2008 increased to $9.9 billion, up 11% from $8.9 billion for the 2007 third quarter.
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Net income increased 11% to $439 million compared with $396 million last year.
“Johnson Controls achieved record results despite the difficult conditions in the domestic automotive and residential construction markets which affect approximately 20% of our revenues,” said Stephen A. Roell, chairman and chief executive officer.
“We continue to grow due to our unique ability to help customers improve their competitiveness, especially in the areas of energy efficiency and sustainability. We also continue to benefit from our strong presence in emerging growth markets and our increasing shares in the large markets for buildings and batteries.”
Automotive experience sales were $4.8 billion, up 3% from $4.6 billion in 2007. North American sales decreased 15%, in line with industry production. Sales in Europe and Asia increased at a double-digit rate, reflecting higher volume and favourable foreign exchange. Industry production in Europe is estimated to have been 2% lower than in the 2007 quarter. In China, where Johnson Controls has more than a 40% market share for complete seats, automotive production in the quarter increased an estimated 13%.
The company noted that during the 2008 third quarter it won significant new automotive interiors business and market share in Europe and Asia as it continued to offer innovative technologies and superior global capabilities.
Automotive segment income was $199 million, up 11% from $180 million last year. In North America, margins improved, however segment income was down 10% as the benefit of operational improvements was more than offset by the impact of lower production, a prolonged labour strike of a supplier to a North American automotive customer and higher commodity costs.
Europe income was level with last year reflecting the cost of downsizing a western European manufacturing facility in the 2008 quarter. The company’s earnings in Asia improved significantly as several new joint ventures in China moved from launch phase to full production of interior systems.
For the full year, the company expects earnings of $2.32 to $2.34, an increase of 10-11% over 2007, making 2008 the sixth consecutive year of double-digit earnings improvements.
The company said that its earnings over the next two quarters will be negatively impacted by the acquisition of Plastech Engineered Products on July 1, 2008 and higher commodity costs. In addition, the company is expected to be impacted by lower year-over-year levels of North American automotive production and continued weak residential construction.
Mr. Roell added, “We are investing in growth and executing our key strategies. In addition, we continue to evaluate our cost structure to respond to the changes in our markets and to improve long-term profitability. We recognize that conditions in the North American automotive and residential HVAC industries will remain challenging. We believe, however, that we can leverage our financial strength and global market leadership to take advantage of our multiple growth opportunities and improve returns to our shareholders.”
