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April 23, 2010

US: Johnson Controls swings to fiscal Q2 profit

Johnson Controls has announced that it swung to a fiscal second quarter profit, boosted by much higher revenues in its automotive division.

Johnson Controls has announced that it swung to a fiscal second quarter profit, boosted by much higher revenues in its automotive division.

Johnson Controls posted a profit of USD274m during the first three months of the year, turning around a loss from the same period last year and prompting the supplier to raise its expectations for the year.

The results beat analysts’ forecasts

“We are pleased with our second quarter results. Our automotive and power solutions businesses are executing very well on the higher production levels in North America and Europe. The Building Efficiency business has started to see signs of recovery with global orders increasing by 5% on a year-over-year basis,” said Stephen A. Roell, Johnson Controls Chairman and Chief Executive Officer.

“Globally our markets are improving, and each of the businesses generated significant margin improvements through our focus on cost and quality. I want to thank our employees for their dedication and commitment to our customers.”

Automotive sales in the quarter increased 70% to USD4.2 billion versus USD2.4 billion last year due primarily to higher production volumes and new program launches in all geographic regions.

North American revenues soared 85% to USD$1.6 billion from $0.9 billion last year, while European sales were up 57% to USD2.1 billion from USD1.3 billion in the 2009 quarter. Sales in Asia increased to USD430 million from USD224 million in 2009 while China revenues, which are mostly generated through unconsolidated joint ventures, rose 91%. Johnson Controls has a 45% share of the Chinese automotive seating market.

The automotive unit reported segment income of USD189 million in the current quarter, compared with a loss of USD269 million (excluding non-recurring items) last year due to higher volumes, operational efficiencies and significantly higher profitability of its automotive joint ventures.

Automotive production levels continue to recover in both North America and Europe due to the continued replenishment of auto dealer inventories as well as increasing consumer demand. As a result, Johnson Controls increased its forecasts for North American and European auto production in its 2010 fiscal year to 10.9 million units and 16.7 million units, respectively.

“We continue to be encouraged by the steady improvement in the automotive industry and therefore have increased our earnings outlook for 2010,” Mr. Roell said.

“In the first half of our fiscal year we have demonstrated the ability to capitalize on the higher production levels with strong execution occurring in all geographic regions. Strong cash flow from our operations has allowed us to accelerate our investments in growth initiatives across all of our businesses.”

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