From Automotive News
Detroit, Michigan - Automotive interiors and battery maker Johnson Controls Inc. posted a quarterly loss, citing restructuring charges and weak auto production, while forecasting a profit for the remainder of its fiscal year.
Johnson Controls said on Tuesday that vehicle demand was stabilizing throughout North America, Europe and China after a 17-month downturn that has driven the industry to the brink of collapse.
The company also said it would participate in the supplier aid programs launched by General Motors and Chrysler llc, backed by as much as $5000 million in funding from the US Treasury.
It was Johnson Controls' second straight quarterly loss after a profit streak that extended 16 years.
"From a financial perspective, clearly the worst is behind us," cfo Bruce McDonald said on a conference call with analysts.
Johnson Controls said it has completed 70 percent of the restructuring it had announced at the end of 2008, ahead of schedule. The actions included shutting 21 plants and eliminating 9300 jobs, or 7 percent of its global work force.
Ceo Steve Roell said: "Our confidence is directly related to the actions we have taken to improve our cost structure and right-size our businesses.
US auto-parts suppliers have come under intense pressure from a collapse in North American auto production at the end of last year and early weeks of 2009. US auto sales plunged 38.4 percent in the first three months of 2009 to nearly 30-year lows.
For the second quarter ended 31 March, Milwaukee-based JCI reported a net loss of $193 million, compared with a year-earlier profit of $289 million profit. The results reflected restructuring charges of $230 million. Revenue fell to $6300 million from $9400 million.
"Global automotive losses, after hefty restructuring steps, appear set to narrow sharply starting next quarter," JP Morgan analyst Himanshu Patel said. The company will likely "reach break-even by year-end."
The supplier said last month that it would close an additional 10 plants and cut more jobs than planned as it expected no near-term recovery in global auto production.
Johnson Controls said it has $2200 million in liquidity.
"Our liquidity position has never been stronger, and the liquidity cloud we had hanging over our heads has been fully addressed," McDonald said.
Johnson Controls ranks as the world's 7th largest supplier of original equipment parts, according to Automotive News' 2008 ranking. The company supplies components for almost every major automaker, including General Motors, Toyota Motor Corp., Honda Motor Co., BMW AG and Hyundai Motor Co.