How Will Johnson Controls Perform In Q3 2016?

Johnson Controls (NYSE:JCI) is expected to announce its third quarter results on Thursday, July 21, 2016.

Key Trends In The Quarter:

1) Focus On Absorbent Glass Mat (AGM) Batteries

• Johnson Controls recently announced plans to invest $445 million to boost the  output of its AGM batteries.
• JCI also stated that it plans to invest a total of $780 million globally by 2020 to increase the production of these batteries.
• Fuel savings amount to 3%-5% with these batteries, but can rise to 10% during traffic times, with a high number of stops.
• Car manufacturers are also under intense pressure to meet strict fuel economy standards by 2025, which will increase the demand for such batteries.
• Currently, this technology is present in only 5%-10% of the US and Chinese market, and about 60%-65% of the European market.

2) Partnership With Target

• On the second quarter conference call, the company announced a deal with Target to replace 3,600 rooftop units at 225 stores.
• This is a three year project, to improve the efficiency of the units currently in place with more efficient HVAC equipment.
• This proves the company is in a good position to take advantage of the high growth expected in this sector.
• According to research group Navigant, the global revenue for energy efficiency commercial building retrofits is expected to grow from $71.4 billion in 2016 to $100.8 billion in 2025.

3) Slowdown In Margin Expansion In The Power Solutions Segment

• The company had earlier guided the segment’s margins for the year down 50 basis points, from 17.5% to 17%, as a result of launch costs in China.

• Despite that, the margins improved 10 basis points during the second quarter.

• However, these costs, combined with construction costs for a new Chinese plant, are expected to have an impact in the second half of the financial year.

Have more questions on Johnson Controls? See the links below:

• Why Is Johnson Controls Banking On China For Its Absorbent Glass Mat Batteries?
• Why Is Johnson Controls Increasing The Production Of Its Absorbent Glass Mat (AGM) Batteries?
• What Are The Prospects For Johnson Controls’ Power Solutions Business?
• What Will Be The Effect On The Segment Operating Margin As A Result Of The Johnson Controls-Tyco Merger?
• What Are The Benefits Johnson Controls Will Attain From The Tyco Merger?
• What Will Be Johnson Controls’ Revenue Composition Post The Tyco Merger?
• Why Did The SG&A Expenses For Johnson Controls Increase In The First Half Of FY 2016?
• How Did Johnson Controls’ Segments Perform in Q2 2016?
• Will The U.S. Treasury Department Rules, That Killed The Pfizer-Allergan Deal, Affect Johnson Controls-Tyco Merger?
• Johnson Controls’ Earnings Beats Expectations
• Will Johnson Controls Miss Estimates Again?
• How Has Johnson Controls’ Net Sales Changed By Geographic Areas?
• How Does The Adient Spin-Off And Tyco Merger Create Value For Johnson Controls’ and Tyco’s Shareholders?
• What Costs Did Johnson Controls’ 2015 Restructuring Plan Entail?
• Johnson Controls: Year 2015 In Review
• How Will Johnson Controls’ Revenue And EBITDA Composition Change In The Next 3 Years?
• What’s Johnson Controls’ Fundamental Value Based On Expected 2016 Results?
• What’s Johnson Controls’ Revenue And EBITDA Breakdown?

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