Auto parts suppliers Johnson Controls Inc. (JCI) and Lear Corp. (LEA) both reported increases in quarterly profits, while sales were negatively impacted by foreign exchange.
Johnson Controls' earnings per share for the quarter matched analysts' expectations, while Lear's earnings beat their estimates and the company raised its earnings outlook for fiscal 2015.
Johnson Controls third-quarter profit from last year edged up from last year, aided by higher revenues at its building efficiency segment. The company also said it plans to pursue a tax-free spin-off of its Automotive Experience business, in about 12 months, as an independent, publicly traded company.
The Milwaukee, Wisconsin-based company's third-quarter net income was $178 million or $0.27 per share, up slightly from $176 million or $0.26 per share in the prior-year quarter.
Johnson Controls has reclassified GWS results to discontinued operations. The company continues to expect the sale of its GWS business to CBRE Group Inc. (CBG) to close in the fiscal 2015 fourth quarter.
Adjusted earnings from continuing operations were $0.91 per share, compared to $0.79 per share last year. On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $0.91 per share. Analysts' estimates typically exclude special items.
Net sales declined 2 percent to $9.61 billion from $9.83 billion in the year-ago period. Excluding the effect of currency translation, sales increased 5 percent. Analysts were looking for revenue of $9.58 billion.
Products and systems sales for the quarter edged down slightly from last year to $8.87 billion, while services revenues declined 21 percent to $736 million.
Building Efficiency segment sales rose 5 percent from last year to $2.73 billion, while Power Solutions segment sales decreased 2 percent to $1.47 billion and Automotive Experience segment sales declined 6 percent to $5.40 billion.
For the fourth quarter, Johnson Controls forecast adjusted earnings from continuing operations of $1.00 to $1.03 per share, expecting a growth of 5 percent from the prior year. Analysts expect the company to report earnings of $1.01 per share for the quarter.
For fiscal 2015, Johnson Controls reiterated its outlook for expectations for segment margin improvements in all three of its businesses.
On completion of the Automotive Experience business spin off, Bruce McDonald, Johnson Controls vice chairman and executive vice president, will serve as the chairman and CEO of the new company. Beda Bolzenius will serve as president and chief operating officer. Automotive Experience reported $22 billion in revenue in 2014.
As part of the spin-off preparation, Johnson Controls is initiating a comprehensive cost savings program and will provide additional details of the transaction as the separation process develops.
Meanwhile, Southfield, Michigan-based Lear's net income for the second quarter rose 22 percent from last year, largely reflecting revenue growth at its seating segment.
Lear's second-quarter net income rose to $181.9 million or $2.33 per share from $148.5 million or $1.81 per share a year ago.
Excluding items, adjusted earnings for the quarter were $2.82 per share, compared to $2.12 per share last year. Analysts expected the company to earn $2.48 per share. Analysts' estimates typically exclude special items.
Lear, a maker of automotive seats and electrical power systems, said net sales for the quarter grew 1 percent to $4.64 billion from $4.59 billion a year ago. Excluding the impact of foreign exchange, net sales grew 10 percent from last year. Analysts' consensus revenue estimate was $4.69 billion.
Seating segment sales rose 4 percent from the year-ago period to $3.6 billion, reflecting the acquisition of Eagle Ottawa. Electrical segment sales decreased 7 percent to $1.1 billion. The company recorded improved margins in both business segments.
For fiscal 2015, Lear now forecasts core operating earnings in a range of $1.225 billion to $1.275 billion, up from the prior range of $1.175 to $1.225 billion. The company affirmed its sales outlook in a range of $18 billion to $18.5 billion.
The Street expects the company to earn $9.62 per share for the year on revenues of $18.40 billion.
CI is trading at $46.65, up $0.31 or 0.67 percent on a volume of 927,055 shares LEA is trading at $103.47, up $4.48 or 4.53 percent on a volume of 632,045 shares.
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