Johnson Controls posts 1Q loss

Johnson Controls loses $608M in 1st-qrt on steep drop in auto and power solutions sales

NEW YORK (AP) -- Johnson Controls Inc., which makes building and automotive systems, said Friday it lost $608 million in its fiscal first quarter and warned that it expects a loss for this quarter, blaming the continued downturn in automotive and construction markets that spread from the U.S. to other key markets around the world.

The first-quarter results were significantly worse than Wall Street projected, sending Johnson Controls shares down 86 cents, or 5 percent, to close at $16.21.

Stephen A. Roell, the company's chairman and chief executive, said the quarter, which was marked by drops in U.S. and European vehicle sales not seen for decades, was a tough one not only for Johnson Controls, but also the entire industry.

"It became more apparent and evident as we went through the quarter that the depth and duration of the U.S. economic slowdown and recession was going to be greater than we initially had expected, as well as the fact it extended into the global markets," Roell told analysts on a conference call.

The Milwaukee-based company said its loss amounted to $1.02 per share. That contrasts with a profit of $235 million, or 39 cents per share, in the prior-year quarter.

Excluding non-cash charges such as impairments on an equity investment along with impairments on its North American and European automotive businesses, Johnson Controls said it lost $82 million, or 14 cents per share, for the recent quarter.

Analysts polled by Thomson Reuters expected a profit of 1 cent per share for the quarter. Those estimates typically exclude one-time items.

Sales fell 23 percent to $7.34 billion from $9.48 billion in the year-ago period. Analysts expected sales of $8.48 billion in sales.

Johnson Controls said it expects to report a second-quarter loss similar to the first quarter's operating loss, reflecting a worsening of automotive demand but better results at its building efficiency and Power Solutions businesses.

The forecast is based on an expected 46 percent drop in U.S. automotive production for the quarter and a 30 percent drop in European production for the year, company officials said.

Analysts, on average, expected a profit of 18 cents per share for that quarter.

Late last year, Johnson Controls warned that it expected to post a loss for the quarter, blaming the steep drop in demand for automotive components. Most U.S.-based auto suppliers have seen their sales tumble this year as a result of severe production cutbacks at the automakers.

The warning came just months after Johnson Controls announced a restructuring plan designed to slash its costs by consolidating plants and eliminating jobs.

Bruce McDonald, Johnson Controls' chief financial officer, said Friday that the company continues to make progress on its plan and has so far completed about 30 percent of the 9,300 related job cuts, while the related plant closings are either on or ahead of schedule.

Company officials also acknowledged that it may have to take further restructuring actions in light of the continued worsening of both the U.S. and European automotive markets, but said they don't expect further plant closures.

Johnson Controls said Friday that its automotive sales plunged 32 percent to $3.13 billion, citing the drops in demand from automakers in both North America and Europe. The company added that it continues to be notified of significant production cuts at its European customers.

Excluding currency, automotive sales dropped 25 percent.

The company's Power Solutions business, which makes vehicle batteries, also posted a sales drop of 32 percent to $1.12 billion, mainly as a result of lower lead prices and lower volumes.

Battery sales to automakers were hurt by lower vehicle production, while aftermarket demand was effected by lower stocking levels and decisions by some customers to put off orders.

Building efficiency sales fell 4.8 percent to $3.09 billion. Excluding currency effects, sales were up slightly.

Johnson Controls said higher North American sales of building efficiency systems were more than offset by double-digit drops at its North American residential business and in Europe.

Efraim Levy, an analyst for Standard & Poor's Equity Research, backed his "Hold" rating for Johnson Controls, saying that while the company's controls and battery business should improve in the second quarter, he still expects the company to post a loss for the period.

"We believe March quarter automotive revenues should fall more rapidly than they did in the current quarter as global auto production is set to drop sharply amid economic weakness and lower consumer confidence," Levy wrote in a note to investors.