Johnson Controls Inc., the largest Wisconsin-based publicly held company, has significant “exposure” to the weaknesses of the American automotive industry, and the company will need to further diversify its businesses to continue its historic growth, according to Stephen Roell, vice chairman and executive vice president of Glendale-based firm.
Roell was the keynote speaker at the 2006 Northern Trust Economic Trends Breakfast presented this morning by Small Business Times at the Pfister Hotel.
Johnson Controls provides interior components and batteries for vehicles. “Ford Motor Co. will be announcing massive reconstruction, probably on Monday,” Roell said. The American automotive industry is having difficulty competing with foreign competition because of its extensive obligations for employee and retiree health care benefits, Roell said. “The financial (health) of the (automotive) industry is only going to get worse before it gets better.”
Johnson Controls’ stock slid $3.32 to $70.23 per share later this morning after the company reported a drop in fiscal first-quarter earnings and a second-quarter forecast that is below Wall Streets analysts’ estimates.
The company reported first-quarter earnings of $165.4 million, or 85 cents per share, down slightly from its year-ago profit of $168.4 million, or 87 cents per share. The company’s quarterly net sales increased 14 percent to a record $7.5 billion from $6.6 billion in the same period a year earlier.
“We continue to transform our businesses, increase our competitiveness, expand our markets and apply our innovation, execution and cost reduction disciplines,” said John Barth, chairman and chief executive officer of Johnson Controls.
“Our businesses were awarded major new contracts in the first quarter of 2006, which is a testament to our continued ability to deliver value to our customers. We believe we are well-positioned to meet our financial targets for 2006 and beyond.”
Johnson Controls also announced today that it has begun exploring strategic alternatives for its Bristol Compressor business. The business is part of York International Corp., which Johnson Controls acquired Dec. 9. Bristol Compressors, which is based in Bristol, Va., manufactures a full line of scroll and reciprocating compressors that are used in air conditioning and heat pump applications.
In addition to Johnson Controls, the stocks of most southeastern Wisconsin publicly held companies dropped substantially today. Strattec Security Corp. lost an astounding $4.87 per share to trade at $39.21 this morning, and Joy Global Inc.’s stock fell $1.95 to $45.26.
This morning’s nosedives followed Thursday’s positive session, in which the BizTimes Stock Index fell .67 points to close at 166.08. The BizTimes Stock Index was created by Small Business Times and is monitored by North Shore Bank. The index, which measures the stock values of publicly held companies based in southeastern Wisconsin, is updated daily and can be viewed at www.biztimes.com.
