DDAIF Mercedes Benz Group AG (PK)

Johnson Controls Inc. (JCI) plans to invest $100 million for building an automotive battery plant in China. The plant will manufacture start-stop batteries and supply to global and local automakers in Asia. It is expected to begin production in early 2013.

Start-Stop system is an emerging technology that saves power/fuel in battery/gasoline powered vehicles. The Start-Stop technology automatically shuts down and restarts the internal combustion engine when the driver engages the clutch or releases the brake pedal to reduce the amount of time the engine spends idling, thereby improving fuel economy and reducing emissions. In gasoline-powered vehicles, it can reduce emissions by 5–12%.

Currently, Johnson Controls is the leading supplier of Start-Stop batteries in Europe through its VARTA brand. It believes the market for Start-Stop batteries will grow to 35 million units by 2015, with the U.S. being the principal market.

The company plans to produce 2.4 million start-stop batteries annually by 2015 for local and global automakers. It is investing $520 million worldwide over the next four years for building additional production capacity for start-stop batteries. The total investment includes $280 million in Germany, $140 million in the U.S., and $100 million in China.

Recently, Johnson Controls invested $138.5 million to convert its battery plant near Toledo, Ohio into an Absorbent Glass Mat (AGM) battery facility. The AGM battery facility, the first in the U.S., will help the company manufacture Start-Stop and other batteries for high efficiency vehicles.

The upgraded Toledo battery plant will expand the existing capacity of AGM batteries by 6 million units in North America. It will launch production in spring 2012.

Johnson Controls Inc. is a supplier of automotive interiors, batteries, and other control equipment. In the most recent reportable quarter, the company has completed 18 major launches for Ford Motor Co. (F), Kia, Volkswagen, Tata Motors, (TTM) Daimler AG (DDAIF) and Honda Motor Co. (HMC).

In the third quarter of its fiscal year ended June 30, 2011, the Zacks #3 Rank (Hold) company posted a modest 4% increase in profit to $383 million (excluding non-recurring items) from $367 million (excluding non-recurring items) in the same quarter of fiscal 2010. On a per share basis, profits rose to 56 cents from 54 cents, beating the Zacks Consensus Estimate by 3 cents.

The increase in profit was attributable to a double-digit increase in sales in all the company’s business segments, which was partially offset by disruptions in automotive production resulting from the earthquake and tsunami in Japan on March 2011.

 
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