JCI Bucks Supplier Loss Trend

December 5, 2005
Print
Text Size:
A A

MILWAUKEE — Not everyone in the automotive supply business is filing for bankruptcy these days. Johnson Controls Inc., which has strengthened its West Michigan operations in 2005, is looking pretty robust across all of its global operations. The Milwaukee-based diversified manufacturing and service company ended its fiscal 2005 on Sept. 30, showing strong results for the last quarter and the year as a whole.

JCI revenues reached a record $27.9 billion for fiscal 2005, a 9.9 percent increase over last year’s performance. Sales and operating income in the company’s various business sectors were up by as much as 122 percent (which was operating income from European automotive interior systems).

However, the company showed decreases in sales and operating income for its North American interior operations, such as those in West Michigan. That total went from $586 million in 2004 to $384 million this year. A $200 million decrease in anything is rarely smiled upon, but it comes in this case paired with $250 million in gains in other operating sectors, for an overall 8 percent increase in operating income.

The company’s investment in its battery operations gave fiscal 2005 a positive charge. Fourth quarter sales increased by 37 percent to $864 million. Operating income was up as well — showing a healthy 79 percent increase to $114 million. Battery sales and operating income were up for the entire year, 29 percent and 47 percent respectively. These increases came in part through the acquisition of Delphi Corp.’s battery business, and consolidation of a Latin American joint venture project during the first quarter.

The company also saw increased success with its “building efficiency” products. That means, primarily, heating and cooling control systems for commercial buildings. JCI’s success in this department has swelled along with commercial construction in recent years. Sales in the company’s third-largest business sector increased to $5.7 billion, a change of 7 percent. Thanks to a strong fourth quarter, operating income in the battery sector was up 22 percent for the year.

Investors appear to have accepted the news kindly. The company’s stock jumped $4 to $70 per share on Oct. 24. After the surge, however, the stock returned to a slightly higher-than-before value around $67. It closed Wednesday at $68.55.

The annual report showed 2005 earnings per share of $3.90. That showed a positive impact of 40 cents’ worth of one-time tax credits, and a negative hit of 92 cents per share for restructuring costs. Overall, EPS was down 2 percent from 2004. However, the restructuring and increased sales will pay off in 2006, as the company is predicting EPS in the $5 to $5.15 range.

The company expects 2006 sales to increase approximately 15 percent to $32 billion. Earnings will rise by a similar figure. The company predicts a 13 percent to 17 percent income increase, resulting in the low $5 EPS. JCI predicts first quarter 2006 revenues to remain similar to those of the final quarter of fiscal 2005, around $6.8 billion.    

Recent Articles by Kevin Murphy

Editor's Picks

Comments powered by Disqus