(Reuters) - Johnson Controls Inc (JCI.N), which makes automotive batteries and heating and ventilation equipment, beat Wall Street’s earnings expectations on Thursday but revenue slid due to unfavorable currency exchange rates and the sale of a business unit.
The company is planning to spin off its automotive seating and interiors business by next October, to focus on its building efficiency and automotive battery operations. For the current quarter, it said it expects diluted earnings per share to grow by 8 to 12 percent versus a year ago.
“For the most part it was a really good quarter but they got hurt by the strong dollar quite a bit,” said David Whiston, analyst at Morningstar.
Shares fell 1.3 percent to close at $44.40.
For the fiscal fourth quarter ended Sept. 30, the company posted net income from continuing operations of $3 million, down from the year-ago $331 million.
The decrease resulted from the recent sale of its Global Workplace Solutions unit and other one-time items, Johnson Controls’ investor relations director, Kathryn Campbell, said.
Revenue from all three business segments declined to $8.75 billion, from $9.95 billion a year ago.
Adjusted non-GAAP earnings from continuing operations were $1.04 per share, up from a revised 97 cents in the year-ago period. Analysts had expected quarterly EPS of $1.01.
The building efficiency segment had sales of $2.9 billion, unchanged from a year ago. Excluding the unfavorable exchange rate, revenue increased 5 percent.
Global orders in the segment were down 4 percent, due to a 37 percent decrease in U.S. government business.
“The decreased orders in the last week of September from the government caught us by surprise,” Johnson Controls CEO Alex Molinaroli said on a conference call with analysts.
Sales in the power solutions segment, which includes automotive batteries, fell 6 percent to $1.7 billion. Excluding unfavorable foreign currency exchange, the company said sales increased 3 percent.
The company repurchased $1.4 billion worth of shares in fiscal 2015.
Johnson Controls said its investment plans in China are on track. It plans to open an automotive battery plant in China by 2018 which will produce Absorbent Glass Mat (AMG) batteries.
“Many of our customers have cut production, but the SUV and luxury market is doing very well,” said Executive Vice President Bruce McDonald, referring to China.
“We are optimistic that the worst is behind us in China and we will see modest single-digit type growth.”
Reporting by Meredith Davis in Chicago; Editing by Matthew Lewis