Johnson Controls Inc.
(
JCI
) posted a 16.1% fall in earnings to 52 cents per share in the
first quarter of fiscal 2013 ended Dec 31, 2012 from 62 cents in
the same quarter of prior fiscal year as global demand for its
products has weakened. However, profits surpassed the Zacks
Consensus Estimate by a penny. Net income declined 16.5% to
$354.0 million from $424.0 million in the first quarter of fiscal
2012.
Revenues in the quarter were flat at $10.4 billion, but exceeded
the Zacks Consensus Estimate of $10.2 billion. Revenues remain
unchanged as the benefit from strong business backlog was offset
by weak demand across the globe, especially in Europe.
Segment Results
Revenues from the
Automotive Experience
segment slid marginally by 1% to $5.2 billion as improved
automotive production in North America (11%) and Asia (3%) were
offset by decreased production in Europe (9%). However, segment
income plunged 50% to $101 million, as improvements in North
America were more than offset by higher engineering and product
development costs, lower volumes in Europe and operational
inefficiencies.
Revenues from the
Building Efficiency
segment were flat at $3.5 billion as higher sales in Asia and
Global Workplace Solutions were offset by lower sales in Europe
and North America. However, segment income went up 19% to $172
million driven by cost reduction measures and pricing
initiatives.
Revenues from the
Power Solutions
segment rose 4% to $1.7 billion driven by a double-digit rise in
unit shipments in Asia and higher demand in Europe. Nevertheless,
segment income dipped 3% to $268 million in the quarter under
review
Financial Position
Johnson Controls had cash and cash equivalents of $314 million as
of Dec 31, 2012 compared with $241 million as of Dec 31, 2011.
Total debt increased to $6.4 billion as of Dec 31, 2012
translating into a debt-to-capitalization ratio of 35.2% compared
with $6.0 billion and a debt-to-capitalization ratio of 34.9% as
of Dec 31, 2011.
In the quarter, Johnson Controls had a cash flow of $298 million
compared with an outflow of $97 million in the year-ago quarter,
mainly due to decrease in contributions towards pension,
postretirement health and other benefits, higher equity in
earnings of partially owned affiliates and increase in accounts
payable. Meanwhile, capital expenditures decreased to $371
million from $538 million in the prior year quarter.
Guidance
Johnson Controls reiterated its guidance to generate lower
earnings in the first half of fiscal 2013 compared with the year
ago period due to weak end markets and adverse effects of foreign
currency. For the second quarter of fiscal 2013, the company
expects earnings per share between 40 cents and 42 cents taking
the automotive production environment in Europe, short-term
delays in flexing labor in the region and a high level of launch
activity into account.
Our Take
Johnson Controls is a supplier of automotive interiors,
batteries, and other control equipment. Its main competitors
include
Magna International Inc.
(
MGA
) in the Automotive Experience segment,
Honeywell International Inc.
(
HON
) in the Building Efficiency segment and
Exide Technologies
(
XIDE
) in the Power Solutions segment.
The company currently retains a Zacks Rank #3, which translates
to a short-term rating (1-3 months) of Hold.
HONEYWELL INTL (HON): Free Stock Analysis
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JOHNSON CONTROL (JCI): Free Stock Analysis
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MAGNA INTL CL A (MGA): Free Stock Analysis
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EXIDE TECH (XIDE): Free Stock Analysis Report
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