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Johnson Controls International (JCI) looks to simplify and streamline its product portfolio, the company’s chief executive officer said Tuesday that JCI is actively pursuing “strategic alternatives” for some of its non-commercial product lines.
“We have successfully removed many layers of cost across the organization, but we know there is more work to be done,” said
George Oliver, CEO of Johnson Controls, which is technically based in Ireland but has its operating headquarters in Glendale. “We will continue to simplify and standardize across our portfolio. As we continue to focus on simplifying the company, we’re always assessing opportunities to advance our transformation into a comprehensive solutions provider for commercial buildings.”
Oliver did not specify what product lines the company is reviewing but did say the non-commercial product lines make up less than 25% of JCI’s revenues.
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Bloomberg News report from late last week said JCI could be considering the sale of some of its HVAC assets for $5 billion.
“When you look at the non-commercial product lines, they’re excellent businesses, but are they consistent with our strategy over the longer term? That’s why we’re now pursuing the alternatives,” said Oliver. “These are good businesses and there’s an opportunity to be able to create more value for our shareholders.”
Among other recent changes at Johnson Controls was the introduction of a new sales incentive plan for employees. Introduced last November, the plan has caused some contention as has even become
subject to legal action.
For the first quarter of fiscal year 2024, Johnson Controls reported that its sales were flat compared to the prior year and declined 1% organically. The Building Solutions North America segment reported an increase in sales of 5% for the quarter, totaling $2.5 billion. Organic sales increased by 4% since last year, driven by double-digit growth in the company's Applied HVAC & Controls category.
JCI also reported its building solutions backlog increased 7% versus the prior year, reaching $12.1 billion. The company’s corporate expenses saw a 28% increase since last year, up to $139 million. JCI paid $39 million in pre-tax restructuring and impairment costs, primarily comprised of severance charges due to ongoing “restructuring actions,” according to a Tuesday press release.
“We have the right strategy and operating system in place to create value for our shareholders,” said Oliver. “As part of our commitment to disciplined capital allocation, we focused on deploying resources to the right opportunities.”
