By Bernie Woodall
Jan 23 Johnson Controls Inc on Thursday
reported a fiscal first-quarter profit that met Wall Street
expectations and reaffirmed its fiscal 2014 outlook, while sales
beat forecasts, helped by higher automobile production,
particularly in China.
Revenue rose 5 percent to $10.91 billion, beating
expectations of analysts polled by Thomson Reuters I/B/E/S of
Net profit for the quarter was $469 million, 69 cents per
share, up from $359 million, or 52 cents per share, a year ago.
Johnson Controls makes car interiors and batteries as well
as heating, ventilation and cooling systems for buildings.
Overall revenue rose, but sales in JCI's building
efficiency business fell 4 percent to $3.38 billion, as gains in
Asia could not overcome lower demand in Europe, the Middle East
and Latin America, the Milwaukee-based company said.
Profit in the building efficiency business of $146 million
was down 15 percent from a year ago.
"While Building Efficiency revenues were lower than last
year, there are early indications of improving global commercial
buildings markets, which should positively impact the business
later in the year," said Alex Molinaroli, the company's chief
A larger part of JCI's revenue came from its automotive
segment, where a rise in global auto sales helped boost revenue
10 percent from a year ago to $5.76 billion. Auto industry
production rose 10 percent in North America, 2 percent in Europe
and 14 percent in China, JCI said.
Automotive revenue in China, which is centered on seating
and generated through non-consolidated joint ventures, rose 33
percent in the quarter to $1.9 billion. Income from its
automotive business rose 130 percent to $232 million, JCI said.
Earlier this month, JCI sold its automotive electronics
business to Visteon Corp for $265 million in cash.
JCI's power solutions business sales increased 6 percent to
$1.77 billion, and raised income by 12 percent to $308 million.
The company forecast profit between $3.15 and $3.30 per
share for 2014 with free cash flow of $1.6 billion. A month ago,
the company issued a forecast that disappointed Wall Street,
which had expected 2014 earnings of $3.31 per share.
JCI said expects its fiscal second quarter earnings of 64 to
66 cents per share, while Thomson Reuters I/B/E/S poll of
analysts shows expectations of 67 cents per share.
In the fiscal first quarter, JCI increased its quarterly
dividend by 16 percent and completed $1.2 billion in share
Analyst Christian Mayes of Edward Jones said that the
company exited the automotive electronics business, which
increased sales by 7 percent in the quarter, because it does not
want to invest heavily to keep up with new technology in
"JCI wants to lower capital spending to enable more share
buybacks and higher dividends," said Mayes. "They will pay more
dividends and share repurchases in the next three years than
they are going to bring in free cash flow. So they don't want to
be spending a lot on capital expenditure."