Johnson Controls Profit Tops $1 Billion

Defying the doldrums and losses experienced by its auto-parts competitors, Johnson Controls Inc. (JCI) on Wednesday reported record results, posting $1 billion in profit for the first time on more than $32 billion in sales. The Glendale, WI-based company, Wisconsin's only Fortune 100 company, said its net income rose 27 percent in its fiscal fourth quarter, as strong sales and profit from its building efficiency and power solutions businesses offset poor results from automotive seats and interiors.

From Milwaukee Journal Sentinel

MILWAUKEE — Defying the doldrums and losses experienced by its auto-parts competitors, Johnson Controls Inc. (JCI) on Wednesday reported record results, posting $1 billion in profit for the first time on more than $32 billion in sales. The Glendale, WI-based company, Wisconsin’s only Fortune 100 company, said its net income rose 27 percent in its fiscal fourth quarter, as strong sales and profit from its building efficiency and power solutions businesses offset poor results from automotive seats and interiors.

The company took major steps in the last two years to beef up both Wisconsin-based businesses to make them more globally focused. The power solutions division bought the battery business of bankrupt Delphi Corp. while the building efficiency unit acquired York International, a maker of air conditioners and heating equipment. Double-digit sales growth in those two units accounted for half of Johnson Controls’ sales, but 78 percent of its $1.03 billion in net income in the fiscal year that ended Sept. 30.

"We’re extremely pleased with our results, particularly in light of the North American automotive marketplace," Chief Financial Officer Bruce McDonald said during a conference call with investment analysts.

In the fourth quarter, the company experienced declining sales in the North American seats and interiors business, which was hit hard by slowing sales of Ford F-series trucks, General Motors minivans, the Chevrolet TrailBlazer and Jeep Grand Cherokee. Tough times in the auto sector will push the North American auto unit of Johnson Controls to a loss in the first quarter, as automakers continue to cut production of light trucks and new vehicle launch costs rise, McDonald said. But earnings per share growth in the final three quarters of 2007 will exceed 15 percent.

In the quarter, net income rose to $360 million, or $1.82 a share, from $283 million, or $1.45, a year ago. For the full year, net income was $1.03 billion, or $5.23 a share, up from $909 billion, or $4.68, a year earlier. Because its fiscal year ends three months earlier than many companies, it’s unclear whether Johnson Controls will be the only public company in the state to post at least $1 billion in profit. In its last fiscal year, Johnson Controls was one of only three Wisconsin-based companies on the Fortune 500 to post net income of at least $900 million. The others were Harley-Davidson Inc. and Northwestern Mutual Life Insurance Co. Excluding income from discontinued operations and accounting-related tax issues, the company said its earnings per share topped the average estimate of investment analysts, improving to $1.86 from $1.50 in last year’s quarter. Sales rose 18 percent to $8.15 billion from $6.9 billion a year ago. As a result, the company projected earlier this month that fiscal 2007 will mark Johnson Controls’ 17th consecutive year of record earnings and 61st consecutive year of record sales.

In the battery business, sales to new customers in the aftermarket business, including Sam’s Club, helped offset declining production of batteries sold to makers of new cars and trucks.