Johnson Controls 1Q Earnings Slip

MILWAUKEE -- Johnson Controls Inc. said Friday first- quarter earnings were down 2 percent because of the slumping U.S. automotive industry, despite gains in the company's battery and climate control system segments.

Earnings for the quarter ended Dec. 31 decreased to $162 million, or 82 cents per share, from $165 million, or 85 cents per share, during the same period last year. The earnings include a loss of $6 million for the quarter from discontinued operations, compared with a loss of $2 million from the same quarter last year.

Last year's first-quarter earnings also included a $16 million tax benefit, equivalent to 8 cents per share. So excluding that, earnings per share this quarter were up 9 percent, the company said.

Excluding the $6 million loss, income from continuing operations rose slightly to $168 million, or 85 cents per share, from $167 million, or 86 cents per share.

Analysts polled by Thomson Financial forecast a profit from continuing operations of 84 cents per share.

Revenue grew 9 percent to $8.21 billion from $7.52 billion in the same period a year ago. Analysts expected revenue of $8.34 billion.

Revenue from the Milwaukee-based company's automotive business fell 11 percent to $4.2 billion, as light vehicle production in North America decreased 8 percent versus a year ago. The company expected the downturn, but the end result was still surprising, said Stephen A. Roell, executive vice president and vice chairman.

"We knew that coming into this quarter. But I would tell you that as the quarter played out, production did soften even further than we expected," he told analysts on a conference call.

Automotive business was down 4 percent in Europe but up 30 percent in China, where the company continues to make inroads, he said.

In North America, the decline in manufacture of vehicles such as the Jeep Grand Cherokee and GM Minivans meant volume in this sector was down $400 million, Roell said. But the company said it is expecting production of SUVs to improve in the next quarter.

The company has been pulling away from the sagging automotive business with job cuts and plant closings for the past few years and instead has been investing in its building efficiencies and power division.

Sales of building efficiencies _ such as cooling and heating systems _ increased 62 percent in the quarter to $2.9 billion, from $1.8 billion in the same period last year. Income in the sector tripled to $123 million, from $41 million in last year's first quarter. Johnson Controls also noted income in this segment fell due to continuing acquisition costs of York International. Johnson Controls bought York, a supplier of heating, air conditioning and other equipment and services, for $3.1 billion in 2005.