Johnson Controls sales efforts gaining traction

Review of power solutions business ongoing

The increased emphasis Johnson Controls International plc has placed on growing sales in its building business is beginning to translate into results with a 3 percent increase in revenue and improving orders during its fiscal second quarter.

George Oliver, Johnson Controls chairman and chief executive officer, said the company has been building momentum across the organization and he’s becoming more confident investments are paying off.

“We’ve been intently focused on transforming for growth,” Oliver said.

In November, Oliver said the company would add 400 net new sales positions during fiscal 2018 while adjusting incentive structures to focus on higher margin offerings.

Oliver said Tuesday the company was able to reach its target for new positions by the end of the second quarter and was seeing better than expected productivity from those new hires.

He also said Johnson Controls would continue to add additional sales positions in select regions and businesses throughout the year.

Revenue for the company, which is operated from headquarters in Glendale and based in Ireland for tax purposes, increased 3 percent to $7.48 billion, including a 1 percent organic increase.

Net income improved from a $148 million, or 16 cents per diluted share, loss to a $438 million, or 47 cents per share, profit. Adjusted earnings improved from 50 to 53 cents per diluted share.

Orders in JCI’s building solutions business were up across geographies during the quarter. Excluding mergers and acquisitions and foreign currency, North America was up 4 percent; Europe, Middle East and Africa/Latin America was up 10 percent and Asia Pacific was up 10 percent.

Organic sales in building solutions was more mixed. North America increased 1 percent with growth in HVAC and controls. Europe, Middle East and Africa/Latin America was down 3 percent with lower volumes in Europe and the Middle East offsetting strength in Latin America. Asia Pacific was down 2 percent with declines in project installations offsetting service growth.

The global products business increased revenue 1 percent, including a 6 percent increase in organic sales.

The power solutions business increased revenue 9 percent, but excluding higher lead costs and foreign currency organic sales were down 2 percent. Original equipment battery shipments were down 2 percent and aftermarket shipments were down 6 percent. Start-stop battery shipments were up 14 percent.

Johnson Controls announced last month it is “exploring strategic alternatives” for the power solutions business, which could include selling the business.

Oliver declined to provide much additional information during the company’s earnings call Tuesday. He said the underlying fundamentals of the business “are extremely strong” and the review is making progress.

Asked to elaborate on what “progress” looked like, Oliver said he wasn’t in a position to provide more detail.

“We’re right in the middle of the process, working through it, and so there’s not much more I can add at this point,” he said. “Certainly as we read a decision and complete the analysis, we’d be positioned to be able to update and communicate to all of you.”

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Arthur Thomas
Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

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