20 Jul Johnson Controls reports record quarterly sales
Milwaukee, Wis. – Despite weaker than-expected results from automotive units, Johnson Controls, Inc., the multinational automotive systems and building controls company, reported record sales for the third quarter of 2006.
The annual profit outlook, however, is getting dimmer due to the continuing slump in North American automotive interiors.
Johnson Controls’ sales for the 2006 third quarter increased 19 percent to $8.4 billion from $7.1 billion for the 2005 quarter, largely due to doubled building efficiency sales and operating income from acquisitions.
The most notable acquisition was finalized in Aug. 2005 with Pennsylvania-based York International Corp., a global supplier of heating, ventilating, air-conditioning, and refrigeration equipment. York has estimated sales of nearly $5 billion.
“The integration of our 2005 acquisitions, that have expanded our market penetration and strengthened our capabilities for our customers, is progressing well,” Chairman and Chief Executive Officer John Barth said in a statement.
The company reported operating income of $280 million, including a restructuring charge of $197 million, compared with $368 million the previous year. Income from continuing operations, including non-recurring tax benefits, was $336 million compared to $255 million the prior year.
Diluted earnings per share from continuing operations were 30 percent higher, reaching $1.70 versus $1.31.
For the first time, the total building efficiency business became the largest contributor to the company’s consolidated earnings, generating 40 percent of operating income in the quarter.
Johnson Controls also reported strong performances by European interiors and North American building efficiency systems businesses.
The results show the value of business and geographic diversification, Barth said.
Year-end earnings expectations have been revised down, however, because of the impact of $3 per gallon gasoline prices and higher interest rates on automotive interiors in North America. Income for that business unit was down 16 percent to $168 million, in part because quarterly sales dropped six percent to $4.7 billion.
Overall, the company still expects annual sales to reach $32 billion, but it now predicts per-share earnings in the range of $5.25 to $5.30, down from previous projection of $5.25 to $5.35.
Johnson Controls reported $30 billion in sales in 2005 and has 136,000 employees in more than 500 locations worldwide.
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