Johnson Controls (JCI) wants to put you in the driver's seat -- an environmentally conscious one. The company makes car batteries and interior parts for combustion engine and hybrid electric vehicles, as well as energy-efficient HVAC systems for commercial buildings. Products include seating, instrument panels, and a slew of electronics. OEM customers include GM, Daimler, and Ford. The battery unit supplies car batteries for retailers such as Advance Auto Parts, AutoZone, Pep Boys, and Wal-Mart. The building efficiency unit makes, installs, and services mechanical equipment that controls HVAC, lighting, security, and fire systems in commercial buildings. The unit also offers on-site facility management.
JCI's building efficiency business segment designs control systems and mechanical equipment, as well as services non-residential properties in about 60 countries. About half of this segment's sales are derived from HVAC products and control systems for construction and retrofit markets, and the other half from services. Branded products include the Metasys control system and York chillers. This segment is looking to such emerging markets as China and the Middle East for strong sales.
The company's power solutions business claims it is the largest lead-acid automotive battery producer in the world. JCI holds an edge over other battery companies, as it is not locked into an alliance with any specific automaker, allowing it to play the field. Its some 70 manufacturing and assembly facilities are located in about 20 countries and produce lead-acid batteries, as well as AGM (absorbent glass mat) battery technology and lithium-ion batteries used in hybrid vehicles. About 77% of the company's batteries are sold in the automotive replacement sector, with the rest going to OEMs. Power solutions is ready to benefit from vertical integration for lead recycling and a shift in its product mix to AGM technology.
All three of JCI's businesses are on the road to economic recovery after the global recession hit the automotive industry particularly hard. With this recovery, the company rebounded from a $338 billion loss in 2009 to a positive net income of $1.5 billion in 2010 and then one of $1.6 billion in 2011. Year-over-year net sales in 2011 rose 19% thanks mainly the effects of acquisitions, as well as the healthier automotive segment.
By segment, automotive experience's net sales surged 21% in response to more demand from auto OEMs and favorable currency exchanges. Accounting for 49% of revenue, this business segment operates about 230 manufacturing and assembly plants in about 35 countries and provides seating, interior electronics, overhead systems, and cockpits.
Building efficiency's net sales (accounting for 37% of revenue) headed up 16% as a result not only of more sales but also because of favorable foreign currency exchanges, similar to its sister segment. Power solutions enjoyed a 20% increase as the result of strong demand and higher prices that tracked the higher cost of lead.
JCI has been boosting its manufacturing capabilities in Europe and elsewhere through acquisitions. In 2011 it acquired Germany-based C. Rob. Hammerstein (CRH), a supplier of metal seat structures, parts, in a move that expanded JCI's presence in China and Eastern Europe. Later that year the company spent $450 million for KEIPER, which is also located in Germany and is a global supplier of metal seat structures and mechanisms.
Keeping the acquisitions going in 2011, JCI obtained EnergyConnect, a California-based smart grid demand response services and technologies provider. The deal increased Johnson Controls' Building Efficiency product portfolio, enabling commercial, industrial, and institutional customers to manage how much energy their buildings use and when the energy is used.
In Europe, Johnson Controls-Saft, the joint venture between JCI and France's SAFT, was dissolved in late 2011. The two companies, once at a stalemate as to the future direction of the joint venture, announced the plan to end the joint venture in mid-2011. The $145 million deal called for the JCI acquisition of Saft's shares and provided a royalty to SAFT Group for its lithium-ion battery technology. The JV, which was started in 2006, had spent $220 million to renovate a plant in Holland, Michigan, to produce lithium-ion hybrid batteries for Ford's new Transit Connect electric car.
At home, JCI plans to shutter a plastics manufacturing plant in Kentucky in early 2013, citing excess capacity. – less
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