MILWAUKEE — Johnson Controls, Inc. (JCI) reported record sales and earnings for the third quarter of fiscal 2008.
Sales for the quarter ended June 30, increased to $9.9 billion, up 11 percent from $8.9 billion for the 2007 third quarter. Segment income was $645 million, a 13 percent increase over $573 million last year, with all three businesses reporting double-digit improvements. Net income increased 11 percent to $439 million compared with $396 million last year. Diluted earnings per share totaled 73 cents, up 11 percent from 66 cents last year.
"Johnson Controls achieved record results despite the difficult conditions in the domestic automotive and residential construction markets which affect approximately 20 percent of our revenues," said Stephen Roell, chairman and chief executive officer. "We continue to grow due to our unique ability to help customers improve their competitiveness, especially in the areas of energy efficiency and sustainability. We also continue to benefit from our strong presence in emerging growth markets and our increasing shares in the large markets for buildings and batteries."
Automotive experience sales were $4.8 billion, up 3 percent from $4.6 billion in 2007. North American sales decreased 15 percent, in line with industry production. Sales in Europe and Asia increased at a double-digit rate, reflecting higher volume and favorable foreign exchange. Industry production in Europe is estimated to have been 2 percent lower than in the 2007 quarter. In China, where Johnson Controls has more than a 40 percent market share for complete seats, automotive production in the quarter increased an estimated 13 percent.
The company noted that during the 2008 third quarter it won significant new automotive interiors business and market share in Europe and Asia as it continued to offer innovative technologies and superior global capabilities.
Automotive segment income was $199 million, up 11 percent from $180 million last year. In North America, margins improved, however segment income was down 10 percent as the benefit of operational improvements was more than offset by the impact of lower production, a prolonged labor strike of a supplier to a North American automotive customer and higher commodity costs. Europe income was level with last year reflecting the cost of downsizing a western European manufacturing facility in the 2008 quarter. The company’s earnings in Asia improved significantly as several new joint ventures in China moved from launch phase to full production of interior systems.
For the fourth quarter of fiscal 2008, the company forecasts diluted earnings per share of 72 to 74 cents, compared with 78 cents in the 2007 fourth quarter.
For the full year, the company expects earnings of $2.32 to $2.34, an increase of 10 to 11 percent over 2007, making 2008 the sixth consecutive year of double-digit earnings improvements.
The company said that its earnings over the next two quarters will be negatively impacted by the acquisition of Plastech Engineered Products on July 1, and higher commodity costs. In addition, the company is expected to be impacted by lower year-over-year levels of North American automotive production and continued weak residential construction.
Roell added, "We are investing in growth and executing our key strategies. In addition, we continue to evaluate our cost structure to respond to the changes in our markets and to improve long-term profitability. We recognize that conditions in the North American automotive and residential HVAC industries will remain challenging. We believe, however, that we can leverage our financial strength and global market leadership to take advantage of our multiple growth opportunities and improve returns to our shareholders."
The company said it expects fiscal 2008 will be the company’s 62nd consecutive year of sales increases and 18th consecutive year of earnings increases.
For additional information, visit: http://www.johnsoncontrols.com.
