JCI Aims to Reduce Dependence on Auto Parts

Alex Molinari, who will become CEO of Johnson Controls Inc. in October, wants the company to reduce its exposure to the auto parts business while expanding its building climate-control unit, Dow Jones Newswires reports.

Molinari, who will add the chairman title on Jan. 1, tells the news service that his goal is to make JCI a "multi-industry company" with a more balanced portfolio.

The auto interiors, seating and electronics businesses currently account for half of JCI's annual revenue. But Dow Jones notes that the high fixed costs, thin margins and cyclical demand of those operations have made company results volatile.

JCI agreed last month to sell about half the electronics unit to Gentex Corp. for $700 million. The company is seeking a buyer for the rest of that unit.

Molinari says proceeds from those sales will be used to reduce JCI's debt and expand its climate-control unit. He wouldn't say whether he plans further divestitures of auto-related operations, which also include automotive batteries.

Analysts opine that the automotive interiors business would be the likeliest candidate for a sale. That unit, which makes consoles, door panels and headliners, lost $20 million last year.