Johnson Controls Inc. Business Report FY ended Sep. 2014

Business Highlights

Financial Overview

(in million USD)
  FY ended Sep. 30, 2014 FY ended Sep. 30, 2013 Rate of change (%) Factors
Sales 42,828 41,410 3.4 1)
Segment Income 2,877 2,686 7.1 -
Automotive Experience
Sales 22,032 20,461 7.7 2)
Segment Income 886 698 26.9 -
Power Solutions
Sales 6,632 6,358 4.3


Segment Income 1,061 1,004 5.7 -

-With the divestiture of the Company's electronics business in the Automotive Experience segment, certain figures have been revised to reflect the business as a discontinued operation. Figures that have not been changed will be noted and marked with an asterisk.

1) Overall
-The Company's sales in the FY ended September 30, 2014 increased by 3.4% over the previous year to USD 42,828 million. Higher sales in the Power Solutions and Automotive Experience segment were offset by lower sales in the Company's Building Efficiency segment. A favorable foreign currency translation also contributed to the increase in sales.

2) Automotive Experience
-Sales for the Company's Automotive Experience segment in the FY ended September 30, 2014 increased 7.7% from the previous year to USD 22,032 million. Both the Seating and Interiors businesses experienced increased sales.
  • The increase in sales for the Seating business was due to higher volumes, additional sales through an acquisition, a favorable sales mix and a favorable impact from foreign currency translation. This is partially offset by a decrease in volume due to a divestiture and lowered pricing.
  • The increase in sales for the Interiors business was due to increased volumes, increased pricing, and a favorable foreign currency translation. These increases were partially offset by a divestiture and unfavorable sales mix.
3) Power Solutions
-The Power Solutions segment's sales for the FY ended September 30, 2014 increased 4.3% to USD 6,632 million. The increase in sales was caused by higher sales volumes, additional sales related to an acquisition, favorable pricing and product mix, as well as the favorable impact of foreign currency translation. These factors were partially offset by the impact of lower lead costs on pricing.


-The Company announced that it has acquired 90% ownership of the Colombian battery supplier MAC S.A., thereby strengthening its commitment to the Central and South American automotive battery market. The two companies have previously cooperated in expanding their footprint by bringing new innovations to the market and increasing exports from Colombia mainly to countries in the Andean region. Additionally, the companies launched a joint venture in June 2011 to produce and sell lead-acid batteries in Central and South America. (From a press release on November 8, 2013)

Joint Venture

-The Company announced that it has signed an agreement with Shanghai Yanfeng Industry and Commerce Co., Ltd. and Anhui Yansheng Automotive Trim Co., Ltd. to form a new fabrics joint venture in Huainan City, Anhui Province, China. The new joint venture, named Anhui New Nangang Johnson Controls Automotive Trim Co. Ltd., will provide Chinese automakers with a variety of services including fabric design, engineering, manufacturing, and trim products. The joint venture will be capable of warp knitting and circular knitting, and will have a product portfolio which includes woven fabrics and seat trim covers. Operations at the new facility are expected to begin in October 2014. (From a press release on July 23, 2014)

-The Company and Yanfeng Automotive Trim Systems Co., Ltd., a subsidiary company under Shanghai Automotive Industry Corporation (SAIC), announced the signing of an agreement to form an automotive interiors joint venture. The resulting joint venture would be the largest automotive interiors company in the world, with revenues of approximately USD 7.5 billion. Yanfeng will own a 70% share in the JV, while the Company will own the remaining 30%. The new company will be headquartered in Shanghai and have engineering, development, and customer centers in the US, Europe, China, Japan, and India. Products that the JV will produce include instrument panels, cockpit systems, door panels, and floor consoles. The transaction is expected to close in the first half of 2015. (From a press release on May 18, 2014)


Divestiture of automotive electronics business to Visteon
-The Company announced that it has completed the divestiture of its automotive electronics business to Visteon Corporation for USD 265 million. Plans for the transaction were originally announced in January 2014. Under the terms of the agreement, Visteon will acquire the Company's instrument cluster, infotainment, display, and body electronics products. The transaction involves approximately 5,000 employees, including 1,000 engineers at seven research and development centers in Europe, North America and Asia. In the fiscal year ended September 30, 2013, the business to be acquired by Visteon generated approximately USD 1.3 billion in revenue. (From a press release on July 1, 2014)


-The Company announced that it won a long-term contract with SAIC to supply Absorbent Glass Mat (AGM) batteries for SAIC's vehicles equipped with automatic engine start-stop systems. AGM batteries have durability levels three times longer compared with normal batteries, which makes them ideal for start-stop systems. The Company plans to invest USD 520 million to expand its global AGM battery capacity and will spend USD 100 million on its Chinese operations to ensure an annual production of 2 million units per year. (From a press release on May 6, 2014)

-The Company is designing and supplying key components for various parts of the Mercedes-Benz S-Class, including the front seats, optional Executive rear seats, rear-seat entertainment system, headliners, and sun visors. The Company collaborated with Mercedes-Benz on the seat design and is providing the automaker's seat production plant with key seat components. One of the features of the vehicle's front seat design is its seat structure. At 20 kg, the front-seat structure of the S-Class weighs approximately 20% less than comparable conventional designs. (From a press release on December 17, 2013)

-The Company announced that its products are featured in the 2014 Cadillac CTS. The company supplies the CTS's complete seat system, which is shipped to the automaker on a just-in-time (JIT) basis. Features that are offered on the seat system include front seat heating and ventilation, rear seat heating, front seat cushion thigh extender and adjustable front seat bolster and lumbar support. Other options include four-way adjustable head restraints, driver cushion alerts to warn the driver of lane departures and front and rear seat side impact airbags. In addition, the Company supplies the vehicle's battery, which uses Absorbent Glass Mat technology. (From a press release on December 12, 2013)


-The Company was awarded top honors in multiple categories by Toyota Motor Engineering & Manufacturing North America, Inc. (TEMA). The Company's Automotive Seating, Automotive Electronics & Interiors, and Power Solutions segment received a "Superior" award in supplier diversity for their seating, overhead console, injection molding, headliner, door trim and battery products. Additionally, the Company's Automotive Seating unit received an "Excellent" award in launch performance for the seats it manufactured for the Toyota Corolla. (From a press release on March 27, 2014)

-In January 2014, the Company received GAC-Honda Automotive Company's 2013 Supply Guarantee Award for meeting customer demand for batteries. In February 2014, BYD Automotive awarded the Company with the top award for Excellent After Sales Service at its car dealerships. The Company was also the only battery manufacturer to receive Zhejiang Geely Holding Company's top award as an Annual Excellent Supplier for quality products and excellent customer support. (From a press release on March 5, 2014)

-The Company announced that it has received three awards from the Volvo Car Corporation. The Company's battery production sites in Hanover and Zwickau, Germany both received a Volvo Cars Quality Excellence Award. Additionally, the Company won the Volvo Cars Award of Excellence 2013 in the category of "Environmental and Social Responsibility". (From a press release on January 6, 2014)


R&D Expenditures

(in million USD)
  FY ended Sep. 30, 2014 FY ended Sep. 30, 2013 FY ended Sep. 30, 2012
Total 792 791 834

R&D Facilities

Technology Centers for Automotive Experience
-Plymouth, Michigan, USA
-Holland, Michigan, USA
-Burscheid, Germany
-Solingen, Germany
-Kaiserslautern, Germany
-Remscheid, Germany
-Trencin, Slovakia
-Shanghai, China
-Changchun, China
-Yokohama, Japan
-Ansan, Korea
-Pune, India

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

-The Company has opened a new crash test facility at its Automotive Seating headquarters in Plymouth, Michigan, US. The 6,000-square-foot facility houses a Seattle Safety ServoSled that allows the automotive supplier to offer the most accurate, standardized safety testing of seats globally through collaboration with its other testing facilities located in Burscheid, Germany; Changchun and Shanghai, China; and Yokohama, Japan. (From a press release on August 12, 2014)

-The Company announced that it has opened a new laboratory at the Wisconsin Energy Institute on the University of Wisconsin-Madison campus. The lab, called the Johnson Controls Advanced Systems Test Lab, will support research focused on vehicular and stationary energy. (From a press release on May 5, 2014)

R&D Activities

Project to optimize production of tailored hybrid tubes
-The Company is currently investing in an automotive research project titled, "Hydroforming of laser-brazed tailored hybrid tubes of a steel-aluminum blend for automotive lightweight construction (IHU-THT)." Parties involved in the project include scientists, laser technology companies, automotive suppliers and automotive manufacturers. During the project's 24-month duration, these parties will cooperate to optimize the production process of tailored hybrid tubes and prepare the tubes for use in industrial applications such as automotive body parts or impact protection for doors and seat cross members. Once complete, the project will then produce the components and present a concept seat using a THT back. The project hopes to develop tubes that provide a 10 to 20% reduction in weight. (From a press release on August 21, 2014)

EIB provides loan for use in R&D of eco-friendly components
-The European Investment Bank (EIB) is making a EUR 220 million loan available to the Company for use in research and development in the field of eco-friendly automotive equipment. An area of research that the Company will focus on is the weight reduction of seats through the use of lighter materials. (From a press release on February 28, 2014)

Technological Alliance

Collaboration with Fraunhofer Gesellschaft for battery cooling systems
-The Company and Fraunhofer Gesellschaft have signed a collaboration agreement to develop a more energy-efficient and cost-effective cooling system for vehicle batteries. The scope of the project will initially focus on the 48-volt Micro Hybrid battery technology, which provides strong fuel and emissions efficiency and improved load management at a lower price compared to standard hybrid and electric vehicle technology. (From a press release on March 20, 2014)

LASHARE project for laser-assisted roll forming process
-The Company announced its participation in the laser technology project called LASHARE. Together with Spanish technology center Aimen and Spanish laser technology manufacturer Monocrom, the Company is working on a
laser-assisted roll forming process. This roll-forming process is being designed for steel rear-seat structures to reduce material cost and weight while enhancing the formability of steel. A test production process is being set up in the Company's metal plant in Hilchenbach, Germany. Approximately 30 companies and six laser technology institutes from across Europe are participating in LASHARE. (From a press release on February 18, 2014)

Partnership with Lawrence Technological University for energy storage technologies
-The Company announced that it will partner with Lawrence Technological University (LTU) in Southfield, Michigan, US to identify and validate new energy storage technologies within the total vehicle system. The research will facilitate the Company's ongoing efforts to help automakers meet fuel economy and emissions standards, help consumers save money at the pump, and deliver improved vehicle performance and functionality. The Company will donate and install state-of-the-art test equipment and deploy technical resources to the university to propel academic and applied research into optimizing vehicle and battery design. (From a press release on January 29, 2014)

Product Development

Dirt and stain-repelling fabric coating
-The Company has developed a coating, called FreshPer4mance, for fabrics that keeps automotive seats clean and hygienic. FreshPer4mance repels dirt and liquid, and protects passengers from microbes and static. The coating can be applied to any type of cover fabric. (From a press release on April 15, 2014)

Automatic seat pre-adjustment system
-The Company has developed an automatic seat pre-adjustment system that shifts the driver's seat location based on the driver's size. The system can be used in three different ways. A driver can input his or her height and weight on a smartphone app developed by the Company or through the vehicle's digital control console. Another option is using an on-board camera installed on the vehicle to measure the driver's body size and allow the system to make adjustments prior to the driver entering the car. The automatic seat pre-adjustment system provides a convenience that is especially useful when multiple people regularly use a vehicle. (From a press release on January 15, 2014)

Investment Activities

Capital Expenditure

(in million USD)
  FY ended Sep. 30, 2014* FY ended Sep. 30, 2013* FY ended Sep. 30, 2012*
Overall 1,199 1,377 1,831
-Automotive Experience 632 754 777
 ・Seating 420 467 549
 ・Interiors 181 235 171
 ・Electronics 31 52 57
Power Solutions 328 425 875
*Total figures include capital expenditure invested in the Automotive Experience electronics business.

Investment outside the US

-The Company is opening a new automotive battery plant in Chongqing, China, that is expected to produce 6 million automotive batteries per year. USD 154 million was invested into the 133,000-square-meter facility. At full capacity, the new facility is expected to create more than 500 new jobs. (From a press release on June 4, 2014)

-The Company announced that is has opened a new plant in Chengdu, China through its joint venture subsidiary, Chongqing Yanfeng Johnson Controls Automotive Components Co., Ltd. The new plant supplies complete seating systems, headliners, floor console carriers, and related services to Volvo. Currently, the plant has 100 employees and is supporting Volvo's plant in Chengdu. (From a press release on November 14, 2013)

-The Company has opened a new manufacturing plant in Queretaro, Mexico which will produce molded polyurethane foam for automotive seats. Construction of the new facility began in March 2013 and was completed in October 2013, with operations scheduled to begin at the plant later in February. The new 100,000-square-feet (9,300-square-meter) plant will supply seating foam to major automakers in central Mexico. The facility has one foam line and employs approximately 150 people. As the plant reaches full production over a five-year period, the number of employees is expected to increase. (From a press release on February 17, 2014)