Johnson Controls Inc. today reported net income of $450 million for the first quarter of fiscal 2016, a 11.25 percent drop from the same time in 2015. The company had diluted earnings per share of 69 cents for the quarter, compared to 76 cents in 2015.
The company also saw revenue decline 7.22 percent to $8.9 billion. The company attributed the drop primarily to the deconsolidation of the automotive interiors business and foreign currency exchange. The drop was partially offset by revenue from the company’s joint venture with Hitachi.
Excluding those factors, the company said sales were up 2 percent. The company reported adjusted diluted earnings per share from continuing operations of 82 cents per share, an increase of 11 percent.
Johnson Controls’ chairman, president and chief executive officer Alex Molinaroli and chief financial officer Brian Stief both praised the company’s management teams for staying focused as the company has undertaken a number of changes including working towards the spinoff of the automotive seating and interiors business. There have also been a number of other divestments, acquisitions and joint ventures since Molinaroli took over as CEO.
That trend continued this week as the company announced a merger with Tyco International. The combined company will have its global headquarters in Ireland, but the operational headquarters will be in the Milwaukee area. While the company has come under fire for saving $150 million in taxes by basing the new company in Ireland, company officials have said the deal is more about offering comprehensive building solutions and harnessing technology.
To that end, the company, according to filings with the Securities and Exchange Commission, sent a Forbes article to employees that argued the tax savings were a “small change compared to what a global giant specializing in better building management is worth to customers, shareholders and the planet.”
“Internally, our team’s incredibly excited,” Molinaroli said during the company’s call with analysts.
He also said he was pleased with the company’s current performance.
“I’m not sure if you were sitting in my shoes how you couldn’t feel good about the ongoing performance of the business,” he said.
The company saw revenue increase 18 percent to $3 billion for the building efficiency business, primarily because of the company’s joint venture with Hitachi. Excluding the joint venture and foreign currency exchange, revenue was up just 1 percent. The company said higher revenues in North America and Middle East were offset by lower revenues in Asia, Latin America and Europe.
The power solutions business saw revenue down 6 percent to $1.7 billion, although the company said there were higher volumes and excluding the impact of foreign currency exchange sales were up 3 percent. A total of 1 million batteries were shipped in China in December, a 35 percent increase from the previous year.
The automotive experience business saw revenue down 20 percent to $4.2 billion, although the company attributed the decrease to the deconsolidation of the interiors business. Excluding that and the impact of foreign currency exchange, sales were up 4 percent.
The company is still on pace to complete the spinoff of the automotive seating and interiors business by October 2016. The new publicly traded company will be known as Adient, the company announced earlier this month. The company had $89 million costs associated with the spinoff in the quarter.