Auto parts supplier Johnson Controls Inc. (JCI) is expected to earn $0.50 per share for the fourth quarter, on revenues of $7.79 billion, according to the Street analysts. The results are due to be released on October 27. In the fourth quarter of fiscal 2008, the company reported earnings of $0.03 per share on net sales of $9.31 billion.
The company projects fourth-quarter earnings of $0.40 - $0.42 per share, which includes a $0.12 warranty charge in its North America residential HVAC business, but excludes the costs associated with its recent convertible debt exchange offer and the impact of non-recurring tax benefits.
For fiscal 2010, Milwaukee, Wisconsin-based Johnson Controls expects earnings in the range of $1.35 - $1.35 per share, significantly higher than 2009. Yearly net sales are estimated to be about $31 billion.
The company said it expects sales, earnings and margin improvements in all three of its businesses, Automotive Experience, Power Solutions and Building Efficiency. The weakness in North America is expected to be offset by the less economically sensitive institutional markets and several of the emerging markets. Also, cost structure improvements taken in the previous year are expected to provide an increasing benefit to the company's profitability.
Stephen Roell, chairman and chief executive officer of Johnson Controls, said, "We expect to deliver profitable growth in 2010, with accelerating benefits in 2011 and beyond as our markets recover."
Most recently, Credit Suisse raised its 2010 earnings per share estimate to $1.58 per share from $1.45 per share, and 2011 estimate to $2.06 per share from $1.86 per share. Further, the brokerage firm noted that if JCI could get to, say 6.5% operating profit margin in the auto business by 2011, versus current 3.6% assumption, the incremental profit would be about $0.50 per share.
In the preceding quarter, the company witnessed a steep decline in profit, totaling $163 million or $0.26 per share, compared to $439 million or $0.73 per share in the prior-year quarter, hurt by a 29.3% drop in quarterly sales, amid the rapid decline in global automotive production as well as the uncertain industry conditions. Net sales decreased to $6.98 billion from $9.87 billion in the previous year.
Among others in the sector, diversified technology and manufacturing company Honeywell International Inc. (HON) posted third-quarter net income of $608 million or $0.80 per share, down from $719 million or $0.97 per share in the year-ago quarter. Quarterly net sales fell to $7.70 billion from $9.28 billion reported a earlier, hampered by double-digit decline in sales across all its business segments. The company expects fiscal 2009 earnings to be $2.85 per share, on sales of about $31 billion. Free cash flow for fiscal 2009 is expected to be $3 billion.
United Technologies Corp. (UTX) reported third-quarter net income of $1.06 billion or $1.14 per share, lower than $1.27 billion or $1.33 per share in the prior-year quarter, hurt by lower operating margins at five of its six business segments as well as an 11% decline in quarterly revenues. Revenues decreased to $13.38 billion from $15.09 billion last year. Given the overall order trends as well as significant cost traction, the company now expects fiscal 2009 earnings of $4.10 per share, the midpoint of the prior guidance range of $4.00 - $4.20 per share.
Johnson Controls shares, which have been trading between $8.35 and $27.90 in the past 52 weeks, closed Monday's trading session at $26.28.
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