This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Johnson Controls Shifts From Autos to Buildings

Stocks in this article: JCI

NEW YORK (TheStreet) -- Thanks to a new joint venture, Johnson Controls (JCI) is going to change its focus from automotive to concentrate on buildings and air conditioning.

Johnson Controls' automotive joint venture with Yanfeng Automotive creates the world's largest automotive interiors supplier. The new company is expected to have annual growth in a range of 6 to 8% with estimated margins of 5% to 6%. The joint venture should also have a 15% global market share, including a 25% share in the Chinese market.

YF Automotive has seen its revenue grow tenfold in the last 10 years. In 2013, JCI Interiors saw revenue of $4.2 billion. The deal unites complementary businesses and will now compete in a market for automotive items including door panels, cockpit systems, interior trims, instrument panels, and floor consoles. The new joint venture will be 30% owned by Johnson Controls.

Thanks to that joint venture behind it, Johnson Controls can now focus on its high-profit Building Efficiencies business. In 2013, the building division saw sales of $14.6 billion, compared to $21.8 billion for all of Johnson's automotive segments. In the second quarter, building efficiencies sales were down 5% to $3.3 billion. Middle East sales dropped 31% in the segment, while sales in Asia rose 5%. Building backlog remains high at $4.8 billion.

Earlier in April, Johnson Controls acquired Air Distribution Technologies for $1.6 billion. The highly complementary deal gives Johnson Controls increased sales in the buildings space and a perfect pair to its strong HVAC business. Air Distribution brands include Ruskin, Titus, Hart & Coley, Krueger, PennBarry, and Tuttle & Bailey.

In December, Johnson Controls entered a joint venture with Hitachi Appliances. The new company, which is 60% owned by Johnson Controls (excluding Japan), combines the huge global reach of JCI with Hitachi's technology expertise. The new deal makes Johnson Controls the world's largest commercial air conditioner provider. The joint venture will help Johnson Controls expand into key international markets using the Hitachi name and brands, focusing on both commercial and residential markets.

Johnson Controls divested its Automotive Electronics business to Visteon and its HomeLink business to Gentex. The company's decision to drop low performing items and focus on strong complimentary acquisitions and joint ventures is a huge step in the right direction for this large company.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,399.67 +19.26 0.12%
S&P 500 1,904.01 +17.25 0.91%
NASDAQ 4,316.0740 +57.6360 1.35%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs