QUOTE AND NEWS
SeekingAlpha  Sep 17  Comment 
By Apex Financial Consultants: Johnson Controls (NYSE:JCI), widely known as an auto supplier, is now turning itself into a multi-faceted company. Under the leadership of its new CEO, Alex Molinaroli, the company has made several strategic changes,...
SeekingAlpha  Sep 17  Comment 
By Balanced Investing: Operating in a slow economic growth environment, companies are constantly focusing on curbing unnecessary costs to increase profits. In an environment where raising demand may not be just a game of marketing anymore,...
newratings.com  Sep 15  Comment 
MILWAUKEE (dpa-AFX) - Auto parts supplier Johnson Controls (JCI) Monday announced a significant reorganization of its Building Efficiency business to better align the division with the company's long-term strategies and to position it for...
Jutia Group  Sep 15  Comment 
[PR Newswire] - MILWAUKEE, Sept. 15, 2014 /PRNewswire/ -- Johnson Controls, a global multi-industrial company, today announced a significant reorganization of its Building Efficiency business to better align the division with the company's...
Motley Fool  Sep 11  Comment 
Key takeaways from Johnson Controls' latest earnings conference call.
Automotive World  Sep 2  Comment 
Focus on new technologies at the IAA Commercial Vehicles 2014 in Hannover Johnson Controls will showcase innovative new fabrics and finishing for seats and truck cabs at the IAA Commercial Vehicles from 25 September to 2 October 2014 in Hannover....
SeekingAlpha  Aug 31  Comment 
By Alpha Strategist: (click to enlarge) Source: Yahoo Finance Johnson Controls (NYSE:JCI) is a global technology and industrial conglomerate. It has a far-reaching global presence and serves customers in over 150 countries on six...
Market Intelligence Center  Aug 28  Comment 
The patented option-trade picking algorithms that power MarketIntelligenceCenter.com's Artificial Intelligence Center are highlighting two trades on Johnson Controls Inc. (JCI) today after it closed at $48.49 on Wednesday. For more conservative...
Automotive World  Aug 26  Comment 
All is not well with regard to automotive manufacturing in Canada. Of late, Canada has not been at the receiving end of much investment, either from vehicle manufacturers or from suppliers. The funds have, instead, gone to Mexico and to the US....
Automotive World  Aug 21  Comment 
Combination of steel and aluminum in laser-welded tailored tubes offers attractive savings potential in high-volume seat back production Johnson Controls, a global multi-industry company, is investing in an automotive research project that...




 

Johnson Controls (NYSE: JCI) makes car interiors and heating, ventilation, and air conditioning (HVAC) products. The company's car parts business is shrinking with the overall US automotive business (the company's automobile sales fell 34% in 2009). Although Johnson Control's automobile components sales generated 42% of 2009 total revenues, the segment lost the company $541 million for the year.

The company is relying heavily on its Building Efficiency and Power Solutions segment, both of which generated the about same amount of segment income at $400 million.

Johnson Controls is one of the few companies, other than energy companies, that is benefiting from higher electricity prices. US electricity prices increased an average of $0.31 per kilowatt hour in 2009, and higher electricity costs encourage building managers to replace their heating and air-conditioning systems with newer, more energy-efficient equipment.

Company Overview

Business Segments[1]

  • Automotive Experience (42% of net revenue): designs and manufactures automotive interiors for automobile companies such as Ford Motor Company (F), General Motors (GM) and Daimler AG (DAI). The company's Automotive Experience products include seats, instrument panels, information displays, headliners and doors. Johnson Control's Automotive Experience revenues decreased 34% in 2009, mainly due to a decrease in sales to the American big three automakers. Although the segment generates a large portion of the company's net revenue, its segment income was -$541 million.
  • Building Efficiency (43% of net revenue): makes heating, ventilation, and air conditioning (HVAC) equipment for commercial buildings. In addition to manufacturing HVAC products, Building Efficiency offers services such as energy efficiency consulting and on site maintenance and property management. The segment's income was $397 million.
  • Power Solutions (14% of net revenue): produces lead-acid automobile batteries. The company sells most of its automobile batteries to aftermarket purchasers through retail outlets like Pep Boys-Manny, Moe & Jack (PBY) and Wal-Mart Stores (WMT). The company also sells batteries to automobile manufacturers. Power Solutions also manufactures absorbent glass matt (AGM), nickel-metal-hydride and lithium-ion batteries that power hybrid vehicles. Although Power Solutions is Johnson Controls' smallest segment, it is the most profitable contributing $406 million in segment income.

Business Growth

FY 2009 (ended September 30, 2009)[2]

  • The company incurred a net loss of $338 million for the period, compared to a get of $979 million in the previous year.
  • Net sales fell 25% to $28.5 billion. Sales fell in all of the company's segments with the automotive (-34%) and power segments (-31%) being hit the hardest.
  • Sales in the Automotive segment fell by more than 25% in all three of the company's geographic regions, with North America suffering the largest loss (-31%).

Trends and Forces

Decreased automobile sales result in decreased sales of Johnson Controls' automobile interiors

In 2009 U.S. sales of automobiles fell to 10.4 million new cars, making it the worst year in terms of car sales in 27 years.[3] The economic slowdown and the instability of the Big Three Automakers is making is more difficult for people to buy cars. When consumers purchase fewer cars, automobile companies buy less interior products from companies like Johnson Controls as they decrease production to meet lowered demand. Despite attempting to minimize the effects of decreased automobile demand by negotiating contracts, Johnson Controls' Automotive Experience revenues decreased by $6 billion dollars between 2008 and 2009.[2]

Exchange Rates resulting in a weak dollar boost Johnson Controls' International Revenue

Because Johnson Controls reports their revenues in U.S. dollars but does 52% of their business outside of North America, it is exposed to fluctuations in exchange rates. If foreign currencies appreciate, the dollar value of Johnson Controls' international revenues increases. [4] In 2009, the unfavorable impact of foreign currency translation was -$2.1 billion.

Competitors

  • Ingersoll-Rand Company (IR) supplies its customers with climate control, industrial, and security products and services. The company's climate control operations, including Trane, compete with Johnson Controls' Building Efficiency products and services.
  • Siemens AG (SI) offers it's customers products and services based on its expertise in electrical engineering. Siemens competes directly with Johnson Controls' Building Efficiency products and services through its Siemens Building Technologies brand.
  • Honeywell International (HON) provides customers with products and services including aerospace products, building products and services, turbochargers, and chemicals. The company's building products and services compete directly with Johnson Control's Building Efficiency segment.
  • United Technologies (UTX) provides technology driven products and services to the building systems and aerospace industries. The company also owns the Carrier Corporation, which competes directly with Johnson Controls' Building Efficiency operations.
  • Lear (LEA) provides automobile manufacturers with seats and electrical distribution systems. The company's seats compete with the seats offered by Johnson Controls' Automotive Experience segment.
  • Magna International (MGA) designs and manufactures automotive assemblies, modules and components such as seats, interiors, metal body systems and metal chassis systems. The company's seats and interiors compete with those produced by Johnson Controls' Automotive Experience segment.

References

  1. JCI 2009 10-K pg. 2-3 and 22-23
  2. 2.0 2.1 JCI 2009 10-K pg. 19
  3. The Truth About Cars "U.S. Car Sales In 2009: Worst in 27 Years" 5 January 2010
  4. JCI 2009 10-K pg. 6
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