Johnson Controls Business Report FY2009

Business Highlights

Financial Overview

(in million USD)
  FY2009 FY2008 Rate of change (%) Factors
Sales 28,497 38,062 (25.1) -
Segment income 262 2,077 (87.4) -
Automotive Experience
Sales 12,016 18,091 (33.6) 1)
Segment income (541) 579 - -

Power Solutions

Sales 3,988 5,850 (31.8) 2)
Segment income 406 541 (25.0) -

Automotive Experience

<North America>
-The decrease in North America was primarily due to the significantly reduced industry production volumes by all of the Company's major OEM customers ($2,500 million), partially offset by the acquisition of the interior product assets of Plastech Engineered Products, Inc. in July 2008, which had a favorable impact of $299 million in fiscal 2009, and net favorable commercial settlements and pricing ($63 million).

-The decrease in Europe was primarily due to lower industry production volumes across all customers ($2,500 million), the unfavorable impact of foreign currency translation ($1,000 million) and higher prior year commercial recoveries ($89 million).

-The decrease in Asia was primarily due to lower production volumes mainly in Korea and Japan ($329 million) and the unfavorable impact of foreign currency translation ($87 million).

Power Solutions
-Net sales decreased primarily due to the impact of lower lead costs on pricing ($1,500 million), lower sales volumes ($352 million) and the unfavorable impact of foreign currency translation ($260 million), partially offset by improved price/product mix ($215 million).


-Johnson Controls-Saft announced that it will be providing lithium-ion batteries for BMW's 7 Series ActiveHybrid car. The lithium-ion cells and modules will be produced at the Johnson Controls-Saft production facility in Nersac, France. (From a press release on Oct.s 14, 2008)

-The Company announced that it will be supplying the instrument panel, headliner including sun visors and grab handles, as well as the structure of the rear seat backrest for new Mercedes-Benz GLK-Class. For the first time, the surface of the instrument panel is made from a second-generation thermoplastic polyolefin (TPO) in one or two colors. (From a press release on Nov. 26, 2008)

-Johnson Controls-Saft has been awarded a contract to supply battery packs for Ford Motor Company. The battery packs are for the automaker's first series production plug-in hybrid electric vehicle (PHEV), which will be introduced in 2012. The five-year agreement includes delivery of battery packs with a target of five thousand units per year. Initially, the cells will be produced at Johnson Controls-Saft facility in Nersac, France, and the packs will be assembled in the United States. (From a press release on Feb. 3, 2009)

-The Company announced that it will be supplying its door panels for the new Lancia Delta. The door panels are manufactured at its plant in Italy and delivered to Lancia's Cassino plant in the nation. The Company also provides the new Delta with ambient lighting on the floor console. (From a press release on Mar. 19, 2009)

-Mercedes-Benz uses 35 VL6P lithium-ion cells in its S-Class S400 BlueHybrid will start shipping later 2009. (From the Company's brochure of Frankfurt Motor Show 2009)

-U.S. automaker Azure Dynamics (AZD), who specializes in hybrid-powered commercial vehicles, will equip its next generation of hybrid-electric delivery vehicles with the battery technology of Johnson Controls-Saft starting at the end of 2010. (From the Company's brochure of Frankfurt Motor Show 2009)

Recent Developments in USA

-In Apr. 2009, Johnson Controls-Saft announced plans to build its first U.S. lithium-ion hybrid battery plant.
>>>See Investment for more details

Outlook for FY2010

Automotive experience business
-The Company expects approximately 13% net sales growth in 2010 from 2009 by its automotive experience business as it benefits from expected production increases in North America and China and a significant number of new seating and interiors program launches in Europe.

-The Company is forecasting a segment margin of 1.3% - 1.6% in 2010, which is a direct result of the Company's cost improvement initiatives and the higher expected volume.

Power solutions business
-The Company expects power solutions net sales to increase 17% (6% excluding the impact of expected higher lead prices), due to volume growth across all regions resulting from expected market share gains and expected higher automobile production levels.

-The Company is forecasting a segment margin of approximately 11.0% - 11.2%, which reflects manufacturing efficiencies and the benefits of cost improvement initiatives, partially offset by increased levels of investment in the Company's lithium-ion hybrid vehicle battery business.

-The Company was awarded a $299 million grant in the fourth quarter of fiscal 2009 by the United States Department of Energy under the American Recovery and Reinvestment Act to build domestic manufacturing capacity for advanced batteries for hybrid and electric vehicles. This award represents approximately half of the Company's total planned investment in domestic advanced battery manufacturing capacity and infrastructure development.


R&D Expenditures

(in million USD)
  FY2009 FY2008 FY2007
Total 767 829 767
Sponsored by customers 431 405 276

R&D Facilities

Technology Centers for Automotive Experience
-Plymouth, Michigan, USA
-Holland, Michigan, USA
-Burscheid, Germany
-Karlsruhe, Germany
-Cergy, France
-Sofia, Bulgaria
-Trencin, Slovakia
-Ayase, Japan

Battery Technology Centers for Power Solutions
-Plymouth, Michigan, USA
-Milwaukee, Wisconsin, USA
-Hannover, Germany
-Monterrey, Mexico
-Sorocaba, Brazil

R&D Activities

"re3" - New concept car at IAA 2009
EcoSpace cockpit structure
-EcoSpace is a hybrid cockpit structure using plastic and steel that eliminates half of the traditional cross-car beam. The steel is used on the driver's side in the form of a tripod, while the plastic is used across the full cockpit width. Weight of this cockpit structure can be reduced by up to 26 percent compared to conventional cross-car beam cockpit.

-Besides reducing weight, optimizing available construction space was a key focus in the development of the re3 cockpit structure. The goal was to remove as many functions as possible from the cockpit and locate them in more appropriate positions. Given many other conceivable layout options, the Company was able to create more leg room for the front seat passenger while also creating spacious storage compartments. As a result, the glove compartment was thus 150 percent larger.

Electronic control functions and user interfaces
-In the re3 concept car, the electronic control functions and user interfaces that were previously located in the center/tunnel console or the door panels were removed and integrated into an alternative, ergonomically favorable position. The electronic controls and user interfaces for the infotainment, HVAC (heating, ventilation and air conditioning) and other systems have now been integrated into the driver's right armrest.

Extended instrument cluster
-Another new feature is an extended instrument cluster, which combines the instrument cluster, infotainment screen and automatic gear change for easy access and convenience of use.

BMW 5-series instrument cluster
-The Company has developed an instrument cluster for this vehicle platform using a manufacturing process based for the first time ever on inverse forming technology for three-dimensional black panel film. This process has eliminated distorted effects and resulted in high image quality and color fidelity.

Mobile terminals
-The Mobile Device Gateway is an electronic module that integrates mobile devices into the vehicle's intelligent system. The electronic system uses a Bluetooth interface to integrate information from the mobile device into the vehicle environment.

Lithium-ion high-energy battery
A lithium-ion high-energy battery for the plug-in hybrid concept is far more powerful than the traditional nickel metal hydride batteries that are still used in most hybrid vehicles. The battery contains 7.6 kWh of energy and is available for series production. It is possible to drive about 50 km with this battery in pure electric battery mode before the internal combustion engine kicks in. The battery is positioned in the tunnel console between the two front seats for maximum safety.

Slim executive seats
-In the re3 concept, the Company has used the super-slim "Slim Seat", which offers the front passenger a high level of seating comfort while leaving a generous amount of knee room for the passenger in the back. This is achieved by using a conventional backrest structure with a thin layer of seat foam and also Comfort Shell technology, which individually adapts to the passenger's body shape. Another feature is the "Conversational Seating" concept, which provides the flexible seating arrangement to make conversation in the cabin easier.

Synergy Seat
-A new seating concept was presented for the first time in Europe at IAA 2009. The latest new development, called the Synergy Seat, combines the Company's modular and lightweight seating structure with its patented comfort shell technology, environmentally friendly foam and trim cover materials and active head restraints - all of which creates significant synergy effects. Almost all materials are recyclable.

Seat coverings
The seats are covered with a light "ultraleather" - a vinyl material that looks and feels like leather but is 68 percent lighter.

Modular structure
-The modular structure reduces weight by up to 30 percent compared to conventional seating.

Red LEDs are sometimes used for the instrument backlighting in addition to the white LEDs to achieve the desired color effect.

Investment Activities

Capital Expenditure

(in million USD)
  FY2009 FY2008 FY2007
Overall 647 807 828
Automotive Experience 369 462 347
-North America 104 143 116
-Europe 235 292 217
-Asia 30 27 14
Power solutions 146 152 336


Investment in USA

-Johnson Controls-Saft announced plans to build its first U.S. lithium-ion hybrid battery plant. Johnson Controls-Saft will use the Company's site in Holland, Michigan. The facility will be renovated with an investment of approximately 220 million USD and will have an initial capacity of 15 million lithium-ion cells. (From a press release on Apr. 14, 2009)