DOW JONES NEWSWIRES
Johnson Controls Inc. (JCI) announced its second broad-based
restructuring in six months and again cut its expectations for
North American and European auto production.
The company, which is one of the world's largest makers of
components for automobile interiors and a manufacturer of heating
and air-conditioning systems, said Friday it will close 10 plants
and eliminate an undisclosed amount of jobs. The effort will be
focused in the auto-parts segment.
The move, which Johnson Controls said is in response to auto
production slumping to a 27-year low on an annualized basis.
The company now sees North American auto production this year of
8.8 million units, down 500,000 from its December estimate, while
it cut its European forecast another 12% to 14.3 million units.
Chairman and Chief Executive Stephen Roell said Johnson Controls
doesn't expect a near-term recovery in its markets, but he said the
company intends to gain further market share while improving
margins.
The restructuring, 80% of which will be in the auto-parts
business, will result in a roughly $200 million charge for the
fiscal second quarter ending Tuesday. Despite the woes, Johnson
Controls said the segment will still be profitable in the third and
fourth quarters.
Some cutbacks will also take place in Johnson Control's
auto-battery business.
As for the restructuring announced in September, the company
said Friday it is ahead of schedule and nearly two-thirds complete.
The effort will boost the bottom line starting in the fiscal third
quarter and increase it by some 25 cents a share in the fiscal year
starting Oct. 1.
Housing and autos have been among the industries hurt most both
during and before the recession, threatening Johnson Control's
investment-grade credit ratings. The company earlier this month
announced plans to sell $750 million of convertible notes and
equity units to pay short-term debt.
Shares closed Thursday at $12.90 and were inactive premarket.
The stock has lost nearly two-thirds of its value over the past six
months.
-By Kevin Kingsbury, Dow Jones Newswires; 201-938-2136;
kevin.kingsbury@dowjones.com