Johnson Controls booked net income of $450m (down 5% year on year) on $8.9bn in revenues in the first fiscal quarter of 2016 which, according to Reuters, missed analysts' forecasts for $9.29bn. Earnings per share were up 11% to $0.82, as analysts expected.
The revenue drop from $9.6bn in Q1 fiscal 2015 was due primarily to the deconsolidation of the company's Automotive Interiors business and foreign exchange, partially offset by incremental revenues from the Hitachi joint venture, JCI said.
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Segment income from continuing operations of $788m compared with $719m a year ago, up 10% (up 15% excluding foreign exchange)
Segment income margins increased 130 basis points versus the fiscal 2015 first quarter (up 80 basis points excluding the impact of the Hitachi and Interiors joint ventures)
Non-recurring items that impacted reported Q1 2016 and Q1 2015 income from continuing operations included a 2016 first quarter net charge of $0.13 per share for transaction, integration and separation costs of $101m ($87m after tax and non-controlling interest) and, in the 2015 first quarter, a net charge of $0.02 per share for transaction and integration costs of $13m ($12m after tax).
"First quarter results continued our track record of sustained profitability improvements," said Alex Molinaroli, Johnson Controls chairman, president and chief executive officer. "We delivered significant margin expansion in our Power Solutions [battery] and Automotive Experience [interiors] businesses."
Power Solutions sales in the fiscal first quarter of 2016 were $1.7bn, down 6% versus the prior year quarter. Excluding the impact of foreign exchange and lower lead pass-throughs, sales increased 3%, with higher volumes in all regions including improved mix. Global shipments of AGM batteries for start-stop vehicles increased 41% compared with the prior year quarter.
Power Solutions segment income was $342m, up 9% (15% excluding foreign exchange), versus $315m in the fiscal 2015 first quarter due to higher volumes, lower lead prices, improved mix and productivity improvements. Segment margins were 19.7% in the quarter, up 260 basis points (up 70 basis points excluding foreign exchange and lead impact) from the prior year quarter.
In December, Power Solutions shipped a record 1m batteries in China, up 35% from the prior year. The company also held the groundbreaking for its previously announced third Power Solutions plant in China. This plant is expected to add 6.6m units of capacity and be operational during fiscal 2017.
Automotive Experience revenues in the fiscal first quarter of 2016 were $4.2bn, down 20% compared to the fiscal 2015 quarter, primarily due to the deconsolidation of the business.
Revenues in China, which are primarily generated through non-consolidated joint ventures, increased 58% to $3.3bn.
Automotive Experience segment income was a first quarter record at $266m, an increase of 11%.
Segment margins were up 180 basis points in the quarter (up 70 basis points adjusting for the impact of the deconsolidation of the Interiors joint venture).
During the quarter, the company revealed that Adient will be the name of its automotive business after the entity is spun-off into a new publicly traded company, which is expected in October 2016.
Johnson Controls expects earnings per diluted share of $0.80 – $0.83 in the second quarter of fiscal 2016 and reaffirmed its guidance of $3.70 – $3.90 for fiscal 2016.
