DDAIF Mercedes Benz Group AG (PK)

Johnson Controls Inc. (JCI) projected a 9% rise in sales to $44.2 billion in fiscal 2012 ending September 30, 2012 based on higher automotive production in North America and China. However, the company expects relatively flat production in Europe compared with fiscal 2011.

The company also projected earnings per share to surge 20% to $2.85–$3.00 for fiscal 2012. Johnson anticipates improvements in sales and margin in all of its businesses, viz. Automotive Experience, Building Efficiency and Power Solutions.

Automotive Experience sales are expected to increase by 6% driven by higher global production volumes and about $1.4 billion in new program launches, partially offset by the negative impact of a weaker Euro. Segment margins are expected to grow by 5.3%–5.5% on the back of higher volumes and full-year benefit from acquisitions to be completed in 2011.  

Building Efficiency sales are expected to grow by 9%–11% based on strong backlogs, growth in Global Workplace Solutions businesses and strong growth in the emerging markets, especially China and the Middle East.

Segment margins are expected to go up by 5.6%–5.8%, driven by global volume growth and improvements in the service business, partially offset by investments in growth opportunities including sales force expansion, information technology developments and costs associated with the launch of new products.

Power Solutions sales are expected to increase by 11%–13%, driven by higher volumes across all regions resulting from market share gains and the positive impact due to the opening of a new plant in Changxing, China.

Segment margins are anticipated to increase by 13.5%–13.9%, reflecting the benefits of vertical integration for the recycling of lead and shift in product mix shift to Absorbent Glass Mat (AGM) battery technology.

The AGM battery technology will help the company manufacture Start-Stop and other batteries for high efficiency vehicles. However, the positive impacts will be partially offset by expenses associated with the consolidation of the company’s hybrid battery business.

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 #4 Rank (Sell) 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 per share basis, profits rose to 56 cents from 54 cents, beating the Zacks Consensus Estimate by 3 cents per share.

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 in March 2011.

 
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