JCI Rebuffs Call to Sell Seating Business

Johnson Controls Inc. is urging patience for critics who complain about shrinking margins for the company's huge auto seating operations, The Wall Street Journal reports.

JCI has a 30% share of the $50 billion car-seat market for car seats, supplying customers via 131 factories worldwide.

Seating generates almost 40% of JCI's revenue. But the company's operating margins in that sector shrank to 3.8% in the fiscal year ended Sept. 30 from 4.4% in the previous 12-month period. Sales rose 3% to $16.3 billion, but operating income fell 12% to $620 million.

The Journal notes that investors cheered JCI's decision in September to sell an auto electronics unit to Gentex Corp. and announcement a month later plans to sell at least some of its auto interiors operations.

Some analysts believe that exiting the seating business would help JCI expand its more profitable building services and ventilation systems units.

But Alex Molinaroli, who took over as CEO last autumn, tells investors that JCI's seating business is and will remain a core activity. The company predicts the unit's margins will improve to 5% this year and achieve 7% by 2018.