From The Milwaukee Journal Sentinel
MILWAUKEE — Johnson Controls Inc. said quarterly earnings rose 17 percent, with both its automotive parts and building controls businesses reporting double-digit sales gains.
Johnson Controls also eliminated a few dozen jobs at its Milwaukee controls division, even as it plans to expand the business by about 100 jobs, the company said Wednesday.
Net income in the fiscal first quarter ended Dec. 31 increased to $164.5 million, or 86 cents a share, from $140.4 million, or 74 cents, a year earlier. Earnings beat the average estimate of analysts by a penny a share.
All per-share amounts reflect a 2-for-1 stock split that took effect Jan. 2. The company’s stock price — up 51 percent in the past 52 weeks — rose 32 cents to $59.69.
Sales increased 23 percent to $6.4 billion from $5.2 billion last year. A stronger euro to the dollar accounted for $400 million of the rise.
“We believe that the first-quarter sales increase is noteworthy, particularly given the lack of growth in the industries we serve,” Johnson Controls chairman and chief executive John Barth said.
The company faces flat to slightly higher growth in the production of cars and light trucks as well as persistent weakness in new building construction, Barth said. “Nevertheless, we came into the fiscal year believing our business backlog and market share expansion would lead to strong growth, and we are confident of that being achieved,” he said.
The local job cuts represent a small piece of an $80 million plan to eliminate jobs and consolidate plants during the current quarter, the Glendale-based company said. Most of the plant closings and work force reductions are taking place at its European automotive business, where the company aims to increase profitability.
The job cuts, which began last week in Milwaukee, reflect shifting business strategy at Johnson Controls’ controls division, spokesman Glen Ponczak said.
“We add in some parts of the business and we delete in other parts of the business as the strategy shifts and also because of productivity enhancements,” he said.
The controls division employs roughly 1,000 people in Milwaukee. That unit reported that sales rose 14 percent to $1.4 billion, as sales growth in North America and Asia offset weakness in Europe. The division’s backlog at the end of December was 6 percent higher than a year earlier, the company said.
Johnson Controls makes building control systems for commercial buildings, and automotive batteries, seats, interiors and electronics for carmakers. The automotive business’ sales surged by nearly $1 billion year-over-year, with gains in North America, Europe and China offsetting declines in South America and the rest of Asia.
The company said it expects a gain of $70 million to $85 million in its second or third quarter because of a transfer of pension obligation for automotive group employees in Japan to the Japanese government.
The transfer will occur in March or April, chief financial officer Stephen Roell said on a conference call. The obligation is the result of Johnson Controls’ purchase in 2000 of Ikeda Bussan Co., a Japanese maker of auto seats and interiors.
Wisconsin’s largest corporation, Johnson Controls is the world’s sixth-largest automotive supplier, according to a ranking by Automotive News.
The profit “reflects their continued ability to win new business,” said Morningstar Inc. analyst Brian Lund. “It’s maybe the best company in the auto sector, certainly one of the best.”
Bloomberg News contributed to this report.
Copyright 2004 The Milwaukee Journal Sentinel. via ProQuest Information and Learning Company; All Rights Reserved.
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