Johnson Controls Sells HomeLink Unit to Gentex

www.chinaspv.com:  Johnson Controls Inc. posted a stronger-than-expected quarterly profit and said it would sell its HomeLink auto electronics business for about $700 million.

The sale of the HomeLink product line to Gentex Corp. is expected to close around the end of September. Johnson Controls said it expects to announce the sale of the rest of the electronics business before its next earnings report.

Morgan Stanley analyst Ravi Shanker called the deal "a nice cherry on top of the quarter."

Since HomeLink accounts for about half the electronics unit's total sales, the price on the deal is a good sign, given speculation that the entire unit would fetch $1 billion, he said.

Johnson Controls, the largest U.S. auto parts maker, said it separated HomeLink from the rest of the electronics business to secure the best possible deal.

HomeLink, a vehicle-based system that allows drivers to remotely activate garage door openers, entry door locks, home lighting, security systems and other products, has been integrated into Gentex products for more than a decade.

Gentex, which makes automatic-dimming rearview mirrors and camera-based lighting and driver-assist systems, said the deal would boost its annual revenue by $125 million to $150 million. Gentex is based in Zeeland, Mich.

In April, Johnson Controls said the potential sale of its auto electronics business was in the early stages. In March, it hired JPMorgan Chase & Co. to run the sale process.

People familiar with the process said last month that Johnson Controls was speaking with private equity firms about the business after interest from rival auto parts suppliers faltered.

Johnson Controls also makes car interiors and batteries, and heating, cooling and ventilation systems for buildings.

The company said net income rose 38 percent to $594 million in the fiscal third quarter ended June 30, compared to $431 million a year earlier.

The company cited double-digit improvement in all its businesses and said its European auto business was profitable after a loss in the previous quarter. Auto sales in Europe have hit 20-year lows, causing many companies in the sector to post losses, close plants and cut jobs.

Revenue rose 2.4 percent to $10.83 billion. Analysts had expected $11 billion.

The auto unit, Johnson Controls' largest business, had a sales rise of 4 percent thanks to higher vehicle production in North America and Asia, partly offset by lower volumes in Europe. For the rest of the year, the company expects auto production to remain strong in China, improve in North America and show signs of stability in Europe.

Sales in the battery business rose 8 percent, but Johnson Controls said demand in the replacement market was weaker than expected in North America and Europe.

Johnson Controls shares shares rose 8.3 percent, or $3.09, to close at $40.43 in New York Stock Exchange trading on Thursday.

The company narrowed the range of its full-year profit forecast, but the mid-point of the range remained unchanged. It sees earnings of $2.64 to $2.66 a share, compared with a previous forecast of $2.60 to $2.70.

It expects fourth-quarter earnings of 93 to 95 cents a share.

Shanker said the full-year and fourth-quarter outlooks remained above average Wall Street estimates.

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