Johnson Controls EPS Falls but Meets Est - Analyst Blog
23 April 2013 - 10:52PM
Zacks
Johnson Controls Inc. (JCI) posted a 23.6%
decline in adjusted earnings to 42 cents per share in the second
quarter of fiscal 2013 ended Mar 31, 2013 from 55 cents in the same
quarter of prior fiscal year, but earnings were in line with the
Zacks Consensus Estimate. Net income declined 24.1% to $287.0
million from $378.0 million in the second quarter of fiscal
2012.
Revenues in the quarter declined 1.3% $10.43 billion but marginally
exceeded the Zacks Consensus Estimate of $10.39 billion. The
decline was attributable to lower revenues in the company’s
Automotive Experience and Building Efficiency segments.
Segment Results
Revenues from the Automotive Experience segment
slid 3% to $5.4 billion due to lower sales in Europe, which more
than offset the higher revenues from North America. Automotive
production in North America improved 1% and decreased 8% in Europe.
However, segment income plunged to $103.0 million from $243
million, due to lower production volume in Europe.
Revenues from the Building Efficiency segment
declined 3% to $3.5 billion, owing to soft global demand, which
adversely affected sales and orders. North America Systems reported
higher sales, which were offset by lower revenues from Europe, Asia
and North America Service. However, segment income went up
marginally to $139.0 million from $138.0 million, driven by
improved labor productivity, reduced costs and implementation of
new pricing programs.
Revenues from the Power Solutions segment rose 10%
to $1.6 billion driven by higher unit shipments in Asia and North
America, partially offset by lower volumes in Europe. Segment
income improved 10.9% to $221.0 million in the quarter under review
from $200.0 million year ago.
Financial Position
Johnson Controls had cash and cash equivalents of $481.0 million as
of Mar 31, 2012 compared with $240.0 million as of Mar 31, 2011.
Total debt increased to $6.7 billion as of Mar 31, 2012 translating
into a debt-to-capitalization ratio of 36.1% compared with $6.3
billion and a debt-to-capitalization ratio of 35.3% as of Mar 31,
2011.
In the first six months of fiscal 2013, Johnson Controls had a
higher cash flow of $515.0 million compared with $146.0 million in
the year-ago period. Meanwhile, capital expenditures decreased to
$664.0 million from $986.0 million in the prior year.
New Facility
During the quarter, Johnson Controls completed the ramp-up of
recycling facility in South Carolina. The company is also planning
for a second battery plant in China.
Guidance
Johnson Controls reiterate its guidance to generate earnings
between $2.60 and $2.70 per share in fiscal 2013. For the third
quarter of fiscal 2013, the company expects earnings per share of
75 cents.
The company also expects that it will record better performance
in the second half of 2013 due to benefits from restructuring
initiatives, higher profitability from its Building Efficiency
segment and improvements in European and South American Automotive
Experience buisnesses. It also expects Power Solutions business to
record higher profitability in the second half of fiscal 2013.
Our Take
Johnson Controls is a supplier of automotive interiors, batteries,
and other control equipment. Currently, the company retains a Zacks
Rank #3, which translates to a short-term rating (1–3 months) of
Hold.
Some other stocks that are performing well in the industry where
Johnson Controls operates include Gentherm Inc.
(THRM), Tower International, Inc. (TOWR) and
Visteon Corp. (VC). All these companies carry a
Zacks Rank #1 (Strong Buy).
JOHNSON CONTROL (JCI): Free Stock Analysis Report
GENTHERM INC (THRM): Free Stock Analysis Report
TOWER INTL INC (TOWR): Free Stock Analysis Report
VISTEON CORP (VC): Free Stock Analysis Report
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