Cost cutting helps JCI get back in the black

Auto-parts and heating-systems maker Johnson Controls (JCI) reported fiscal third quarter earnings that topped expectations, as cost cutting initiatives partially offset lower-than-expected revenue.

Sales in the auto-parts division fell 38% to $3 billion, while the battery division revenues fell 39% to $856 million because of fewer orders from automakers. Johnson Controls gets 55% of its revenue from auto-parts and batteries units.

The rest of the company’s revenue come from the buildings-services division, which saw revenues drop 14% from a year ago as construction spending contracts and companies defer discretionary maintenance and retrofit projects.

Johnson Controls is bidding on about 2,700 projects worth about $800 million related to the U.S. government’s stimulus package. The company expects the stimulus programs to have a “meaningful positive impact on financial performance in the second half of fiscal 2010.”

Management said uncertainties remain in their businesses, but global automotive production “appears to be stabilizing.” In addition, management estimated that commercial buildings and residential HVAC markets would bottom in the next six to nine months.
--

Peter J. Lazaroff