UPDATE 2-Johnson Controls plans spinoff of automotive business in 12 months

Fri Jul 24, 2015 4:28pm EDT
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(Adds CEO comments from conference call, analyst comment, details)

July 24 (Reuters) - Johnson Controls Inc said on Friday it planned to spin off its $22 billion automotive business in the next 12 months and reported quarterly earnings roughly in line with analysts' expectations.

Shares of the company fell 4.5 percent to $44.24.

"I think there is a little disappointment with the spin versus a sale," said UBS analyst Colin Langan. "But personally, I don't think it is a big deal either way; only if they sell it, JCI would have gotten a lot of cash."

The company said automotive income from continuing operations rose 19 percent to $342 million in the third quarter ended on June 30 from a year earlier. The segment's revenue fell 6 percent to $5.4 billion as the stronger dollar reduced the value of overseas sales.

The business includes automotive seating, overhead systems, floor consoles, door panels and instrument panels.

"It is the largest seating supplier in the world," Langan said. "There are only a handful of people that could come up with that size of the financing to do the deal."

Last month the company said it was exploring options to exit the automotive seating and interiors business to focus on its higher-margin building efficiency and automotive battery operations.

But some analysts were surprised at how quickly Johnson Controls decided to spin off rather than sell the automotive business.   Continued...