Johnson Controls Reports First Loss in 16 Years

Battery and automotive components manufacturer Johnson Controls has posted its first quarterly loss since 1993. Details of the company’s negative performance was given on January 16 along with news that employee wages are to be frozen and bonuses cut. A second quarterly loss is also anticipated, the company disclosed.

A decrease in sales of almost 23 per cent led to the US$608 million first fiscal quarter loss, said Johnson controls. Excluding non-cash charges, the loss equates to $82 million, or 14 cents a share, compared with $235 million or 39 cents a share in profit during the same period of fiscal 2008.

“It became more apparent and evident as we went through the quarter that the depth and duration of the US economic slowdown and recession was going to be greater than what we had initially expected, as well as the fact that it extended into the global markets,” said chairman and chief executive Steve Roell. Given that the North American automotive industry is in this current quarter is forecast to perform 46 per cent below last year, Roell believes the weakness seen in Johnson Control’s first quarter will most likely continue: “The market environment and uncertainties we face are expected to continue in the second quarter. We are implementing strategies to take advantage of opportunities in the marketplace.”

The company’s response to the business downturn has already been witnessed in plans to eliminate more than 9,000 jobs, consolidating or closing 21 plants. In addition, the wages of “almost all of our bonus-eligible people” have been frozen and the company has imposed a hiring freeze. Roell adds that “we are looking at flexible work hours in some of our businesses relative to four-day weeks.”