Johnson Controls third fiscal quarter 2009 profits were down about two-thirds as the battery and interiors supplier, also active in the building sector, reported a profit of US$0.26 per share on net sales of $7bn, segment income of $282m and net income of $163m. The auto interiors business itself booked a loss of US$14m versus a profit of $199m a year ago when net company sales were$9.9bn, segment income was $645m and net income $439m, or $0.73 a share.


“In most of our global markets this quarter, economic conditions remain very challenging.  I am pleased to report that despite this environment, we returned to solid profitability. The cost improvement initiatives we undertook earlier this year are providing the expected benefits. We believe the company is well positioned to further increase our profitability in our fourth quarter and into 2010,” said chairman and CEO Steve Roell.


Automotive interior sales in the quarter declined 38% to $3bn from $4.8bn last year due to significantly lower production volumes globally. Automotive industry production in North America was down 48% versus a year ago as a result of prolonged production shutdowns in the quarter as well as overall lower consumer demand. European production declined 27%.


Consequently, the interiors business booked a Automotive Experience reported a loss of $14m versus $199m in the 2008 period, due to the lower global volumes.


Johnson said this nonetheless was “a significant sequential improvement” over the second quarter of 2009 when the business reported a $275m loss on revenues of $2.4bn. Asian operations increased segment income by 31% to $17m and the European segment posted a “small profit” while the North American segment reported a loss of $34m.


“The improvements in segment income were primarily the result of cost reduction initiatives which will enable the ‘automotive experience’ business to be profitable in its fourth quarter,” JCI said.


The company also said that during the US automakers’ scheduled summer shut downs, it would take over two seating and interiors programmes currently supplied by competitors.


It said it expects automakers to continue to look for ways to assure continuity of supply and was well positioned to gain market share from financially distressed competitors.


‘Power solutions’ (aka auto battery) sales were down 39% to $856m in the quarter as lower lead prices and currency translation negatively impacted revenues; overall unit volumes were 12% lower.


Original equipment automotive battery volume was lower in both North America and Europe due to the decline in auto production levels.


Segment income fell 27% to $106m due primarily to the lower unit volume. Income was also negatively impacted in the quarter by a $15m charge associated with the sale of a former manufacturing facility and other fixed asset write-offs.


Johnson Controls said it expected fourth quarter income to improve to 2008 levels despite the continued lower expected original equipment volumes.


A third quarter highlight was the start of shipping the first lithium-ion hybrid battery systems for the Mercedes S-class due in showrooms this summer.


The company also said it was accelerating its plans to build a new lead smelter in Mexico to process recycled lead. Increasing its in-house smelting capacity is expected to lower production costs and improve segment profitability. The new smelter is expected to be completed in October 2010.