Johnson Controls on Friday reported a first quarter fiscal year loss of US$608m on sales of $7.3bn.
Go deeper with GlobalData
Excluding non-recurring, non-cash charges, the loss was $82m or $0.14 per share. The company had last month said it expected a loss for the quarter.
In contrast, net sales for the same quarter last year were $9.5bn and income $235m or $0.39 per share.
This year, $562m of non-recurring charges included a $110m asset impairment in the automotive business, a $152m equity investment impairment in the North American building products unit and a $300m tax valuation allowance.
“While we are disappointed to report a loss in the quarter, we are addressing the challenges by improving our cost structure and preserving our liquidity,” said chairman and CEO Stephen Roell.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataPower Solutions (automotive battery) sales in the first quarter were down 32% year on year to $1.1bn, primarily reflecting the impact of lower lead prices as well as lower volumes.
Original equipment auto battery volume was hit by the decline in global vehicle production rates and aftermarket demand was softer due to lower stocking levels and deferred orders by some customers.
Power Solutions segment income was $40m, down 70% from $133m last year partially due to the lower volumes.
An inventory revaluation of used batteries, purchased when lead prices were significantly higher, also hit income by approximately $50m this quarter, although that was a one-off.
Along with its results, JCI today announced a contract with new customer O’Reilly Auto Parts. Shipments will begin in February to more than 1,000 Checker Auto Parts, Kragen Auto Parts and Schuck’s Auto Supply stores nationally.
Automotive Experience (interior parts) sales in the quarter declined 32% to $3.1bn versus $4.6bn last year due to significantly lower production volumes globally.
Automotive production in North America was down 30% versus a year ago to a level not seen in more than 25 years, JCI noted.
European production declined significantly and the company said it continued to receive notifications of significant production cuts. Excluding currency, sales declined 25%.
Unsurprisingly, Automotive Experience reported a loss of $329m. Excluding the impairment charge, the loss in the current quarter was $219m versus a profit of $78m in the 2008 period, due to the lower global volumes.
The company said it also expected a loss in the segment in the second fiscal quarter with an expected return to profitability in the second half of the year.
North American production levels in the second quarter are expected to be 46% below last year’s levels.
Johnson Controls said it expected to report a overall loss in its fiscal second quarter similar in scale to the first quarter’s operating loss but with improved performance by its Building Efficiency and Power Solutions businesses.
It also said its previously announced restructuring program is progressing to plan with resulting financial benefits expected to boost earnings in the second fiscal quarter.
“The market environment and uncertainties we face are expected to continue in the second quarter,” Roell added. “We are implementing strategies to take advantage of opportunities in the marketplace.”
