NEW YORK Johnson Controls Inc. (JCI) was less profitable in its fiscal first quarter compared with the same period a year earlier, citing softer European demand and continued uncertainties in global markets.
The Milwaukee-based company posted net income of $354 million for the three months ended Dec. 31, down 16.5 percent from revised income of $424 million a year earlier but still an improvement from an $8-million net loss in the fiscal fourth quarter ended Sept. 30, 2012.
Net sales of $10.42 billion were virtually unchanged from both the previous quarter and the same period a year earlier and were consistent with company forecasts.
Despite a 4-percent increase in battery shipmentsprimarily to Chinaand stronger battery demand in Europe, earnings by JCIs Power Solutions segment dipped 2.5 to $268 million in the quarter from $275 million a year earlier.
JCI executives said during a conference call Jan. 18 that unusually warm weather will present significant headwinds for near-term growth, since battery replacement rates are closely correlated to extreme temperatures.
"Colder temperatures could really help us out," chairman and chief executive officer Stephen A. Roell said during the call. "While warm weather didnt impact our shipments, we expect demand to pick up with a drop in temperatures."
At the same time, explosive growth in China has helped contribute to increased battery sales. "Our automotive business is still down in Europe, but China continues to remain extremely positive," said Bruce McDonald, executive vice president and chief financial officer.
Other segments of the company, including its Automotive Experience and Building Efficiency units, show muted prospects for near-term growth, the company said. The Automotive Experience segment, which focuses primarily on automotive seating, electronics and interiors, saw a significant drop in earnings to $101 million in the most recent quarter from $201 million in the three months ended Dec. 31, 2011.
"European demand continued to soften and we began restructuring in the third and fourth quarters of fiscal 2012 to improve our performance in the region," said Roell, noting that the overall earnings outlook for the company remains under pressure.
"Uncertainties remain in our global markets, and we expect earnings in the first half of fiscal 2013 to be significantly lower than 2012, consistent with our earlier forecast," said Roell.