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JCI says divesting unprofitable interiors unit is an option

By: Andrew Thurlow
AUTOMOTIVE NEWS

October 29, 2013

Johnson Controls Inc. said it would explore various options for its unprofitable automotive interiors unit, including a divestiture.

The plan is part of the Glendale, Wis.-based supplier's strategy under new CEO Alex Molinaroli, who replaced Steve Roell on Oct. 1. Molinaroli said JCI would make moves to become a more multi-industry company, focusing more efforts on its automotive battery and building efficiency units.

JCI's automotive interiors unit, which makes various components such as headliners and instrument panels, generated revenue of $4.2 billion and lost $13 million in the most recent fiscal year, the company said in a statement today. The company's seating operations are not included in the strategic review.

In late September, the company reported the sale of a portion of its electronics operations, HomeLink, to Gentex Corp. for $700 million. Gentex, which makes dimming rearview mirrors and other driver-assist systems, said in July that the deal would boost its yearly profits by $25 million to $150 million.

An announcement regarding the sale of the remaining electronics business, which totals to about $1 billion a year in sales, is expected to be made by the end of the calendar year, JCI said in a statement.

Also today, JCI posted a quarterly profit — excluding onetime items — of $657 million, up from $526 million in the fourth fiscal quarter a year ago. After onetime costs, the company said it posted net income of $105 million in the quarter vs. a loss of $8 million during the same period last year.

Its quarterly revenue also rose to $11.05 billion, compared to $10.39 billion in 2012.

The company's new CEO, Alex Molinaroli, said today that JCI expects earnings to rise 30 percent in the next quarter.

"While the macroeconomic environment continues to be challenging, each of our businesses generated top line growth in the fourth quarter. Even more importantly, they all had significant improvements in profitability," Molinaroli said.

Former CEO Steve Roell remains chairman of the board of directors until Dec. 31.