Johnson Controls Sales Decline on Automotive Interiors Weakness

By Lisa Beilfuss 

Johnson Controls Inc., which this week struck a deal to merge with Tyco International PLC , said sales slid in the first quarter on weakness in its automotive interiors segment.

The Milwaukee company and Tyco on Monday unveiled a mostly-stock transaction roughly valued at $14.4 billion, a so-called inversion that will move Johnson Controls' address to Ireland and save it considerable tax dollars. The deal will bring together Johnson Controls' business selling heating and air-conditioning equipment for skyscrapers, schools, hospitals and other structures with Tyco's lines of security and fire-suppression gear into a company with more than $30 billion a year in sales.

Johnson Controls has been pivoting away from low-margin automotive markets and toward more profitable industrial businesses. As part of that shift, the company has said it would spin off the remaining parts of its automotive-seat business--its largest unit and the world's biggest maker of automotive seating. The new entity will include the company's car seating line as well as its share of an auto interiors venture with China's Yanfeng Automotive Trim Systems Co.

The separation of the automotive experience segment is on track, Johnson Controls said Thursday, as sales in the unit fell 20% from a year earlier. The decline was mostly due to a deconsolidation of its interiors business, the company said. Power solutions sales fell 6%, although an 18% increase in revenue from the building efficiency business helped offset those declines.

Overall, Johnson Controls reported a profit of $450 million, or 69 cents a share, down from $507 million, or 76 cents a share, a year earlier. Excluding restructuring costs, among other items, earnings per share rose to 82 cents from 79 cents.

Revenue declined 7.2% to $8.93 billion. Analysts projected 82 cents in adjusted per-share profit on $9.29 billion in revenue, according to Thomson Reuters.

Shares in the company, down 1.3% since the merger was announced and off 24% over the past 12 months, were inactive premarket.

Write to Lisa Beilfuss at [e-mail]

(END) Dow Jones Newswires

January 28, 2016 08:14 ET (13:14 GMT)

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