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ALV Allianz AG

290.10
-0.20 (-0.07%)
07:02:58 - Realtime Data
Share Name Share Symbol Market Type
Allianz AG TG:ALV Tradegate Ordinary Share
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -0.20 -0.07% 290.10 290.10 290.40 290.50 290.10 290.10 152 07:02:58

UPDATE: Johnson Controls To Close 10 Plants; Cuts Auto Outlook

27/03/2009 4:57pm

Dow Jones News


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The global automotive recession appears to be deepening after Johnson Controls Inc. (JCI), a bellwether of the parts making sector, cut its auto production forecast and said it will close 10 plants.

The Milwaukee-based company now expects North American light vehicle production to fall another 500,000 vehicles to 8.8 million vehicles during its fiscal year ending Sept. 30. The company also cut its European forecast another 12% to 14.3 million units.

Parts makers are the best gauge to measuring the health of the auto industry since their products are ordered ahead of time by auto makers based on demand.

"When you look at the restructuring by Johnson Controls and Autoliv Inc. (ALV), both among the most proactive in the supplier industry, it is a signal to us that things have not bottomed and there will be more restructuring to come from the other suppliers," said Robert W. Baird analyst David Leiker, who is based in Milwaukee.

Johnson Controls, a supplier of batteries and interior components to almost all auto makers, will spend as much as $215 million to close the plants and trim an undisclosed number of jobs. the company didn't say which plants will be closed. The company also operates a building division that provides services and products to commercial properties.

Autoliv, the world's largest maker of seatbelts and airbags, said earlier this week it cut 3,000 more jobs in the first two months of 2009 and will sell 13.4 million treasury shares of its common stock in hopes of raising $364 million to help offset the cash drain from a drop in demand.

"In December and January, U.S. auto sales appeared to have stabilized and then we got February numbers and March is expected to be a bigger step down," Leiker said. "We also see Europe weaker than expected and now it looks like sales won't stabilize there in the summer as expected."

Johnson Controls said about 80% of the restructuring will be concentrated on the auto-parts business, resulting in a charge for the fiscal second quarter ending Tuesday. An undisclosed number of jobs will also be trimmed. Some cutbacks will also take place in Johnson Control's auto-battery business.

This is the second restructuring announcement the company has made in six months. In September, the company launched a $495 million program aimed at reducing costs in its interiors, battery and building services business. The company said it is ahead of schedule and nearly two-thirds complete. The effort will boost the bottom line starting in the fiscal third quarter and increase it by some 25 cents a share in the fiscal year starting Oct. 1.

Housing and autos have been among the industries hurt most both during and before the recession, threatening Johnson Control's investment-grade credit ratings. The company earlier this month announced plans to sell $750 million of convertible notes and equity units to pay short-term debt.

Shares fell 26 cents or 2% to $12.64 in earlier trading Friday. The stock has lost nearly two-thirds of its value over the past six months.

-By Jeff Bennett, Dow Jones Newswires; 248-204-5542;jeff.bennett@dowjones.com

(Kevin Kingsbury contributed to this story.)

 
 

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