By Ryan Beene, Crain's Detroit Business
Detroit, Michigan -- The positive earnings performance of Johnson Controls Inc. could be a bellwether for the remaining publicly-traded auto suppliers scheduled to release earnings next month.
JCI's 31 percent jump in automotive revenue in its first fiscal quarter which ended 31 Dec, was tied to growth in car and truck production volumes from the abysmal levels in late 2008, a trend expected to continue and boost sales throughout the rest of the supply chain.
JCI's Plymouth, Michigan-based Automotive Experience business posted net income of $121 million in its first fiscal quarter ending 31 Dec on revenue of $4 100 million, up from a net loss of $321 million in its first quarter last year.
"Right now, between the fourth quarter of last year and even coming into the first quarter, we're seeing some pretty decent production schedules," said Mike Wall, director of advisory services at Northville, Michigan-based CSM Worldwide Inc.
"We've got an inventory re-build scenario where we've got to get some more vehicles out there…so that helps to put a little more tailwind on production numbers which starts cascading through the supply chain."
North American car and truck production volumes grew by roughly 8 percent in November and 17 percent in December compared with the same months in 2008, according to data from Automotive News.
That trend surged in the first half of January 2010, with more than 451,000 vehicles rolling off assembly lines by Jan. 16, a more than 180 percent jump from the 157,000 built in roughly the same time last year.
CSM forecasts about 10.5 million cars, pickup trucks and SUVs will be built in North America this year.
JCI pegged the number at 10.3 million, raising its prior 2010 estimate of 9.8 million.
While JCI is one of the healthiest suppliers in the business, its performance is likely to be followed by others, Wall said, pointing to Wall Street analysts who recently raised their performance expectations for auto suppliers.
"It's a good reflection of the activity and traction that we're getting on the production front," he said.
For example, American Axle & Manufacturing Holdings Inc. expects to post its second consecutive quarterly profit when it releases its fourth quarter earnings on 5 Feb, according to a 13 Jan US Securities and Exchange Commission filing.
Other publicly-traded suppliers scheduled to release earnings include ArvinMeritor Inc. on 2 Feb, TRW Automotive Holdings Inc. on 2 Feb, Lear Corp. on 5 Feb, BorgWarner Inc. on 11 Feb and Federal Mogul Corp. on 23 Feb.