Johnson Controls CEO: We're not a consolidator
NEW YORK (Reuters) - Johnson Controls Inc (JCI.N) has the money to invest in acquisitions when some rivals find themselves in distress, but the car interiors company will not act as a consolidator of failing U.S. auto suppliers, its two top executives said on Tuesday.
The company, which also makes batteries and building efficiency systems, is interested in deals to expand into geographic markets where it has no role, or to add technology that can open doors to new markets.
"We're not a value player. We're not a consolidator," Chief Executive Stephen Roell told Reuters in an interview.
Roell spoke on the sidelines of an analyst meeting in New York, in which Johnson Controls laid out a forecast of improving sales and profits for fiscal 2010.
The financial crisis -- which saw the bankruptcies of General Motors GM.UL and Chrysler, as well as parts suppliers Lear LEARQ.PK and Visteon VSTN.PK -- could mean $700 million to $800 million in sales as a direct result of distress at Johnson Controls' peers, Chief Financial Officer Bruce McDonald said.
"We picked up $200 million in the auto business as a result of the distress in those two companies in particular," McDonald said of Lear and Visteon. "Some of our customers are nervous about the long-term viability of those competitors."
DELPHI ASSETS
McDonald said the company has the capacity to make acquisitions, but added, "Consolidation in the sector is not a strategic interest to us."
Asked whether Johnson Controls would be interested in bidding for Delphi's electronics business, Roell said: "There's good and bad there. My broader answer is, I don't think that's available. That's core to them."
Auto parts maker Delphi exited bankruptcy last week after four years under court protection.
Overall, the auto industry was moving toward smaller vehicles, but there is no correlation between the size of a vehicle and profitability. It has also meant a faster embrace of hybrid or electric vehicles than was expected.
Eventually, the North American auto industry is likely to see more Chinese players, McDonald said.
"I think you'll see the Chinese become an increasingly significant part of the global sector, not just their own market but exporting and local manufacturing in Europe and, before long, North America," McDonald said.
"Even if they're not able to buy assets here, you'll see them expand into these other markets because they have global aspirations."
OF BATTERIES AND RETROFITS Continued...
