Johnson Controls Hopeful for 2010

In its fiscal 2010 forecast meeting with financial analysts, Johnson Controls (JCI - Analyst Report) has revealed that it anticipates commendable sales and earnings growth in the fourth quarter and in fiscal 2010 as markets recover. 

The management has commented that the company expects to earn 40 to 42 cents per share for the fourth quarter ended Sep 30 compared to the Zacks Consensus Estimate of 39 cents per share. It expects sales of $7.9 billion for the quarter. 

Consolidated net sales are expected to increase 9% to $31 billion in fiscal 2010. Earnings per share are expected to lie in the range of $1.35 and $1.45, slightly higher than the Zacks Consensus Estimate of $1.44. 

The Wisconsin-based company has stated that it expects sales, earnings and margin improvements during the next fiscal in all of its businesses – automotive, power solutions and building efficiency. In the Automotive Experience business, the company expects revenue to increase 13% as it benefits from production increases in North America (14%) and China (19%), besides a significant number of new seating and interiors program launches in Europe . 

Sales for the Power Solutions business are expected to rise 17% (6% excluding the impact of higher lead prices), driven by volume growth across all regions resulting from market share gains and higher auto production levels. 

Building Efficiency business is expected to register a revenue growth of 3% due to growth in the emerging markets and an increase in demand. 

Johnson Controls has estimated capital expenditure during fiscal 2010 to total $625 million–$675 million to boost capacity in emerging markets, launch new auto businesses and fund improvements in the battery business. 

The company has revealed that it has minimal debt due this fiscal and about $1 billion maturing in fiscal 2011. We recommend the shares of Johnson Controls as Neutral with a target price of $27.

Read the full analyst report on JCI