UPDATE: Johnson Controls 3Q Profit Down 63%; Sees 4Q Rebound
21 July 2009 - 4:35AM
Dow Jones News
Johnson Controls Inc. (JCI) said Monday that its auto-parts unit
would return to profit in the current fiscal fourth quarter, but
added that the global construction market remains soft.
The U.S. group is split between auto parts and systems for the
commercial and residential building markets, and the company
forecast improvements across all three during the three months
ending Sept. 30.
The company on Monday beat expectations for its third quarter,
as restructuring efforts helped counter a 31% fall in auto
revenue.
"We expect to see our revenues tick up in the fourth quarter and
bring us to about $7.4 billion," Chief Financial Officer Bruce
McDonald said on a conference call.
The company has shrunk its auto segment to reflect falling
global production rates, and the business was profitable in Europe
and Asia during the latest quarter.
North American production is expected to be higher in the second
half of the year, flipping the traditional pattern, following an
extended period of plant shutdowns.
McDonald said the global construction market remain soft,
especially in areas such as Latin America where discounting is
pushing down pricing. Its building group backlog in Europe and the
Middle East fell by double-digit percentages during the third
quarter.
The total order backlog is expected to be down year-on-year at
the end of the fourth quarter, though it expects a nonrecurring tax
benefit of up to $125 million.
Johnson Controls shares were recently up 5.8% at $22.77.
Johnson Controls is bidding on hundreds of stimulus-related
projects it values at up to $800 million, though the benefits are
not expected until later next year.
"We expect that in this quarter, as well as the first half of
2010, this will be largely a period where we'll win awards," said
Chairman and Chief Executive Steve Roell. "We would expect to
execute and get revenue in late 2010."
For the three months to June 30, Johnson Controls reported a
profit of $163 million, or 26 cents a share, down from $439
million, or 73 cents a share, a year earlier. Sales dropped 29% to
$7 billion.
The auto unit swung to a small loss as sales tumbled 38%, with
North American auto-industry production down 48% amid shutdowns at
General Motors Co. and Chrysler Group LLC. Chrysler shut its
factories for almost two months in May and June. European output
fell 27%.
Roell said the company has been paid by Chrysler on the amount
due for product shipments during the bankruptcy process.
"While we still have a few items to reconcile with General
Motors that the customers paid us for the majority of the amounts
outstanding," Roell said.
-By Jeff Bennett, Dow Jones Newswires; 248-204-5542;
jeff.bennett@dowjones.com