CHICAGO (Reuters) -- Johnson Controls Inc. on Monday said quarterly earnings rose 4 percent as growth in building heating and cooling systems and batteries helped to offset North American operating declines in auto interiors.
Johnson Controls also said it expects to complete its acquisition of York International Corp. in December to add to its building controls business, and backed first-quarter and fiscal 2006 earnings outlooks issued earlier in October.
"They certainly distinguished themselves ... but they are not immune to the pressures faced by other suppliers, mainly lower production in North America and commodity costs," Fitch Ratings managing director Mark Oline said.
What sets the company apart from its peers, Oline said, is its strength in batteries and building controls, and a diverse customer and geographic base within automotive interiors.
Net income rose to $283.8 million, or $1.45 per share, for its fiscal fourth quarter, ended Sept. 30, from $273 million, or $1.41 per share, a year earlier, the company said.
Earnings per share from continuing operations were $1.50, matching analysts' consensus forecast for the Milwaukee, Wisconsin-based company, according to Reuters Estimates.
Sales rose 7.2 percent to $6.9 billion.
Johnson Controls, the world's largest producer of lead-acid car batteries, earlier in October forecast double-digit earnings and revenue growth for fiscal 2006, setting it apart from U.S. auto parts makers restructuring in and out of court.
Auto interiors sales rose 4 percent to $4.5 billion, but operating income fell 13 percent to $206 million, mainly because of higher commodity costs.
Interiors' operating income fell 29 percent in North America, but rose 31 percent in Europe with nearly equal sales. In a much smaller Asia unit, operating income fell 39 percent.
Building heating and cooling systems sales rose 5 percent to $1.5 billion and operating income rose 40 percent to $115 million, mainly on growth in higher margin services business.
Battery sales rose 37 percent to $864 million, and operating income rose 79 percent to $114 million, supported by higher volume and sales of more expensive batteries.
North American vehicle output cuts at Ford Motor Co. and General Motors, rising raw materials costs and price reduction demands from automakers have crushed many of the large U.S. auto parts makers in 2005.
Delphi Corp. filed for bankruptcy on Oct. 8 and auto interiors supplier Lear Corp. and auto and truck parts maker Dana Corp. have issued earnings warnings.
Johnson Controls has sought to expand its building controls and battery businesses, which would reduce its emphasis on auto interiors. It announced the York acquisition in August, and two weeks ago said it had landed an order for hybrid vehicle batteries.
Automakers have said supplies of hybrid vehicle battery packs have been constrained by increased demand, affording an opportunity for Johnson Controls, which supplies packs to buses in Europe.
The company expects first-quarter earnings of 82 to 85 cents per share, on sales of $6.8 billion. Analysts expect earnings per share of 77 cents a share, with sales of $6.93 billion.
Johnson Controls expects earnings per share to rise 13 to 17 percent, to a range of $5 to $5.15 in fiscal 2006, with sales growth of about 15 percent to $32 billion.
Analysts, on average, expect it to earn $5.04 per share on revenue of $31.95 billion in fiscal 2006.