Johnson Controls Inc. Business Report FY2010

Business Highlights

Financial Overview

(in million USD)
  FY2010 FY2009 Rate of change (%) Factors
Sales 34,305 28,497 20.4 -
Segment income 1,933 262 637.8 -
Automotive Experience
Sales 16,610 12,016 38.2 1)
Segment income 591 (541) - -

Power Solutions

Sales 4,893 3,988 22.7 2)
Segment income 669 406 64.8 -

Automotive Experience

<North America>
-The increase in North America was primarily due to higher industry production volumes by the Company’s major OEM customers ($2.1 billion) and incremental sales from a business acquisition ($58 million), partially offset by unfavorable commercial settlements and pricing ($36 million).

-The increase in Europe was primarily due to higher production volumes and new customer awards ($1.8 billion) partially offset by unfavorable commercial settlements and pricing ($32 million) and the unfavorable impact of foreign currency translation ($20 million).

-The increase in Asia was primarily due to higher production volumes and new customer awards ($603 million) and the favorable impact of foreign currency translation ($125 million).

Power Solutions
-Net sales increased primarily due to higher sales volumes ($454 million), the impact of higher lead costs on pricing ($316 million), the favorable impact of foreign currency translation ($69 million), incremental sales due to a business acquisition ($43 million) and favorable price/product mix ($23 million).


-Johnson Controls-Saft has been chosen as the Lithium-ion battery supplier for Azure Dynamic's Force Drive integration on the Ford Transit Connect Battery Electric Vehicle (BEV). The all-electric van will be in production beginning in late 2010. Azure worked with Johnson Controls-Saft on Balance™ Hybrid Electric delivery and shuttle bus project. In addition to its work with Azure, Johnson Controls-Saft is in production with the Mercedes S-Class hybrid, currently on sale in Europe and the United States. Johnson Controls-Saft also will supply the Li-ion hybrid batteries for the BMW 7-Series ActiveHybrid available in 2010 and Ford's first plug-in hybrid electric vehicle available in 2012. The Transit Connect BEV will use the same battery technology that is currently installed in the Ford Escape test fleet of plug-in hybrid electric vehicles, also supplied by Johnson Controls-Saft. The Johnson Controls-Saft battery systems, including electronics, electrical and mechanical components, will be assembled at the company's facility in Holland, MI. (From a press release on December 1, 2009)

Business Partnership

-The Company has signed a global strategic agreement with Geely Holding Group in China. Under the agreement, two partners will cooperate in the automotive components and the clean energy segments. (From a press release on December 17, 2009)

-The Company said it will form a strategic comprehensive partnership with Tachi-S Co., Ltd. on development and manufacture of automotive seating systems with the aim of winning the business from Japanese automakers. The Company will acquire a 5 percent equity stake in Tachi-S for about 1.7 billion yen, becoming the largest shareholder. Tachi-S will use the fund to construct a new technical center. The two companies have been maintaining cooperative relationship since 1980s in North America, Japan and China. While the U.S. supplier has been intending to expand the transaction with Japanese automobile manufacturers by offering products to meet their needs, the Japanese counterpart has been aiming to further enhance its competitive edge in the global market. These motives have coincided on both sides leading to the conclusion of the comprehensive alliance. (From an article in the Nikkan Jidosha Shimbun on Apr. 26,2010)

Joint Ventures

-The Company has agreed to acquire 90 percent of its joint venture Delkor Corporation, an automotive battery manufacturer based in Seoul, South Korea. The Company will invest approximately 90 million USD in the acquisition. The remaining 10 percent will be acquired by the local management team, with all transactions completed no later than August 15, 2010. The Company is also investing an additional 40 million USD to add 2.7 million units in capacity, increasing Delkor's total capacity to approximately 10 million batteries per year. The Delkor joint venture was part of the Company's acquisition of Delphi's global automotive battery business in 2005. (From a press release on July 23, 2010)


-Benecke-Kaliko AG announced the intention to sell its 84.8% holding in Benoac Fertigteile GmbH, Germany, to the Company. The Company will hold an 89.6% interest by acquiring additional shares owned by Benecke. The transfer of the shares is to be completed by the middle of 2010. Another co-owner is the Japanese company INOAC Corporation, which holds a 10.4% share. Benoac manufactures surface materials for instrument panels, referred to as slush skins. The materials are provided to Audi, Ford and Volkswagen as well as auto suppliers such as Johnson Controls, Faurecia, Magna and Visteon. (From a press release on March 19, 2010)


-The Company's Power Solutions received the 2009 Supplier of the Year Award from General Motors Corporation for its batteries. This is the fourth Supplier of the Year award the Company has received from GM. (From a press release on March 25, 2010)

-The Company's Power Solutions has received the 2009 Excellence Award from Honda de Mexico for the second consecutive year. Honda de Mexico recognized the performance of Torreon plant in Mexico, which currently supplies batteries for the Honda CR-V in Mexico. (From a press release on April 29, 2010)

Outlook for FY2011

Automotive experience business
-The Company expects moderately higher automotive production in North America, with flat European production, versus fiscal 2010. China automotive production is expected to increase in the coming year, though at a slower pace than in fiscal 2010.

-The Company expects approximately 5% net sales growth in fiscal 2011 by its automotive experience business, reflecting the impact of new seating and interiors program launches in addition to the slightly higher production volumes.

Power solutions business
-Power solutions net sales are expected to increase 10% – 15% due to volume growth across all regions resulting from market share gains and growth in emerging markets. Segment margins are expected to be 13.4% – 13.6%, reflecting manufacturing process efficiencies, the benefits of vertical integration for the recycling of lead and the expansion of local production capacity in China.


R&D Expenditures

(in million USD)
  FY2010 FY2009 FY2008
Total 723 767 829
Sponsored by customers 315 431 405

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

"ie:3" - New concept car at 2011 North American International Auto Show in Detroit
 The ie:3 features:
- Johnson Controls-Saft's next-generation, low-profile lithium-ion battery pack. It is a unique, self-contained system that is integrated easily into the vehicle in a small space under the floor. The new prismatic format cell achieves greater packaging efficiency and uses less space in the vehicle.

- "stadium seating" which when deployed in the front row, offers enough space to stow a suitcase. The rear seats easily fold flat to the floor, creating even more storage options. A center console is spacious enough to accommodate a large handbag.

- The features and functions in the ie:3 are adaptable to markets around the world and are available for model-year 2015 and beyond.

Some of the innovations featured in the ie:3 include,
Battery Technology:
- Energy supplied by new, lithium-ion prismatic cells packaged neatly in a small space under the flat floor as a complete system, enabling a target 100-mile range per charge.
- Improved spaciousness and flexibility enabled by fold flat and "stadium seating" features; and
- Seat pads made from natural fibers that are easier to recycle.
- An innovative, lightweight alternative sound system, featuring a headliner with integrated audio that enables increased storage opportunities in vehicle doors; and
- Unique LED lighting that enhances the overall interior ambiance.
- A comprehensive driver information system featuring a 6.5-inch "transflective" cluster display, which improves visibility even with the glare of sunlight, and a transparent, integrated heads up display.

Investment Activities

Capital Expenditure

(in million USD)
  FY2010 FY2009 FY2008
Overall 777 647 807
Automotive Experience 386 369 462
-North America 123 104 143
-Europe 225 235 292
-Asia 38 30 27
Power solutions 272 146 152


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)

Investment outside USA

-The Company announced it is investing 118 million USD to build a third automotive battery plant in China, to be located in Chongqing. The plant complements the Company's existing plants located in Shanghai and Changxing. The plant will have capacity to produce 6 million batteries annually. Ground breaking for the plant will take place in January 2011, with production slated to ramp up beginning in January 2012. In addition to the new Chongqing plant, the Company's' previously announced Changxing automotive battery plant will launch production in early 2011 with an expected capacity of 8 million batteries annually. These 3 plants will produce more than 18 million automotive batteries annually. The Company will later this year begin locating its fourth plant, with a capacity of 6 million batteries, in the northern region of China. These plants support their plan to install capacity for 30 million batteries annually in China by 2015. (From a press release on October 6, 2010)