Johnson Controls International Plc · NYSE:JCI
Johnson Controls International — Investor Day (October 2010)
115 slides from Johnson Controls International's investor day presentation, Oct 12, 2010
Slide 1: Strategic Review and 2011 Outlook
October 12, 2010 Strategic Review and 2011 Outlook Exhibit 99.2
Slide 2: 2010: Our 125th anniversary
2010: Our 125th anniversary 2010: Our 125th anniversary 2 Johnson Controls
Slide 3: Johnson Controls global headquarters
2010: Our 125th anniversary Johnson Controls global headquarters Johnson Controls global headquarters Johnson Controls global headquarters 3 Johnson Controls
Slide 4: LEED Platinum certification of headquarters
2010: Our 125th anniversary Johnson Controls global headquarters Johnson Controls global headquarters Johnson Controls global headquarters 4 LEED Platinum certification received Sept. 2010Largest concentration of LEED Platinum buildings in the world Johnson Controls
Slide 5: Leadership continuity
2010: Our 125th anniversary Leadership continuity 5 Jim KeyesCEO 1988 - 200238 years of service John BarthCEO 2002 - 200739 years of service Johnson Controls
Slide 6: Some things have changed since our centennial
2010: Our 125th anniversary Some things have changed since our centennial Significant growthComplexity of our businessesGlobalizationWholly-owned and JV structuresIncreased value-add of our offeringsSeat components ? complete interiorsControls ? complete HVAC solutions and GWSN.A. lead acid batterie
Slide 7: Our Values haven't changed
Our Values haven't changed The foundation of our past and future success 7 Integrity.Honesty, fairness, respect and safety are of the utmost importance.Customer Satisfaction.Our future depends on us helping to make our customers successful. We are proactive and easy to do business with. We offer exp
Slide 8: Strategic Review and 2011 Business Outlook
Strategic Review and 2011 Business Outlook My comments today...Reflections on 2010Momentum entering 2011Near-term macro environmentBusiness unit strategic prioritiesInvesting in growth Investing in growthInvesting in growthInvesting in growthInvesting in growthInvesting in growthInvesting in growth
Slide 9: Reflections on 2010: Highlights
Reflections on 2010 Highlights Market share gains in all three businessesStrong growth in ROW markets, particularly ChinaBenefitted from cost reduction initiativesImproved margins in all businessesGood cash generation resulting in strong liquidity position 9 9 Johnson Controls
Slide 10: Reflections on 2010: Challenges
Reflections on 2010 Challenges Late cycle recoveries of the new construction marketNorth America and Western EuropeMagnitude and complexity of our automotive interior launches103 major program launches in 2010 - a recordNew seating mechanisms launched for the first time: height adjuster, recliner, f
Slide 11: Entering 2011
Entering 2011 Solid growth in backlogs; evidence of market share gainsAutomotive up from $2.5 billion to $4.0 billionBuilding efficiency up 10% at end of fiscal 2010Significantly higher Global Workplace Solutions contract winsIncreasing demand for SLI and AGM batteriesGeographic and capacity expansi
Slide 12: Macro environment
Macro environment Modest recovery in North American and European auto marketsChina growth slowsAutomotive OEs challenged to meet coming fuel efficiency / CO2 emission reduction mandatesBattery technology increasingly seen as key solutionBuilding Efficiency customers faced with near-term GHG reductio
Slide 13: Sustainable, profitable growth: Automotive Experience
Sustainable, profitable growth Primary strategies for 2011 and beyond Automotive ExperienceCapitalize on the recovery of the North American and European automotive industryWorld-class launch executionExpand capabilities, market share in AsiaBuild world-class component capabilityDrive innovation and
Slide 14: Sustainable, profitable growth: Building Efficiency
Sustainable, profitable growth Primary strategies for 2011 and beyond 14 Positioning to ensure sustainable, double-digit growth once the markets recover Building EfficiencyExpand energy solutions offeringPerformance contracting to new geographic marketsRenewable energy expertiseBuild sales force / s
Slide 15: Sustainable, profitable growth: Power Solutions
Sustainable, profitable growth Primary strategies for 2011 and beyond Power SolutionsContinue technology leadershipSLIAGMLithium ion hybridSupport the accelerating industry demand for AGM batteriesAggressively grow our market presence in AsiaContinue to deploy advantaged manufacturing processesInves
Slide 16: Investing for growth
Sustainable, profitable growth Investing for growth Higher level of capital investmentIncreasing battery manufacturing capacitySLI, AGMCapacity and footprint expansion in emerging marketsSupporting increased level of Automotive Experience new business awardsVertical integrationInformation technology
Slide 17: Accelerating investments in selected growth initiatives
Sustainable, profitable growth Accelerating investments in selected growth initiatives Acquisitions: a platform for growth through...New customers / channelsNew technologiesNew global opportunitiesPriority given to investments that provide the best opportunities for long-term growth and sustainable
Slide 18: 2011 Outlook
2011 Outlook Johnson Controls 18 ....based on key assumptions you will hear in detail later today $2.30 - $2.45 Consolidated net sales Earnings per share $37B +9%
Slide 19: Long-term objectives
Sustainable, profitable growth Long-term objectives Organic growth greater than twice the rate of our underlying industry / market growthContinued margin expansionMinimum annual net earnings growth of 10-15%15% after-tax ROIC 19 19 Johnson Controls
Slide 20: Well-positioned for sustainable, profitable growth
Johnson Controls Well-positioned for sustainable, profitable growth Johnson Controls is a company that...Is positioned for sustainable, profitable growth - in both mature and new marketsHas the market insight and customer relationships to adapt and lead industry change Knows how to effectively deplo
Slide 21: Automotive Experience
Automotive Experience Beda Bolzenius Vice President and President, Automotive Experience
Slide 22: Automotive Experience: Competitive advantage
l Automotive Experience Competitive advantage Leading global provider of systems and components for seats, overhead systems, doors, cockpits and electronics Global reach Vertically integrated Complete interior capability Investing in technology and advanced development to protect our long-term compe
Slide 23: Automotive Experience: Key accomplishments
7 Automotive Experience Key accomplishments Achieved lower break-even level Contribution margin at 15%-20% Increased Low-Cost-Country content Footprint Supply base Engineering Commodity indexing New business quoting discipline Optimized capacity utilization Preserved differentiating capabilities Cor
Slide 24: Automotive Experience: Gaining share
% Automotive Experience Gaining share 60% incremental sales backlog increase Improved geographic balance Continued growth in China Further strengthened diversified customer portfolio Increased vertical integration content Profits align with quoting discipline Johnson Controls 4 Incremental Sales Bac
Slide 25: Top new wins for the 2011-2013 period
Automotive Experience Top new wins for the 2011 - 2013 period Johnson Controls 5 GM Chevrolet Cruze Interior - S.America Seating - Russia Nissan Multiple Programs Seating Japan & China Proton Lancer Seating Malaysia Ford Small Segment Seating Chery B15 & M16 Interior & Seating China Ford Transit Con
Slide 26: Top launches 2011
Automotive Experience Top launches 2011 Johnson Controls 6 VW New Compact Sedan Seating & Interior China Honda CRV Visor Japan/ Mexico/ China Toyota Small Segment Seating India Honda Civic Bluetooth Handsfree Europe Renault/ Samsung L47 Cluster Korea Ford Focus Seating - Europe Cluster - Europe/ N.
Slide 27: Automotive Experience: Market drivers
Automotive Experience Market drivers Suppliers are facing key changes in the markets and OEM sourcing strategies Market Growing demand for smaller vehicles Rising environmental awareness Increased quality and safety expectations OEM Strategy Differentiating innovation Upgrade of interiors Sustainabi
Slide 28: Automotive Experience: Sustainable, profitable growth
Automotive Experience Sustainable, profitable growth Johnson Controls is well positioned to outpace the market recovery over the long term Increasing our investments in value-creating growth initiatives Cost Leadership Vertical integration Emerging markets with focus on China Technology and advanced
Slide 29: Automotive Experience: Cost leadership
Automotive Experience Cost leadership World-class cost base through our best business practices (BBP) methodology Preferred process technology Supply chain management Complexity reduction In-plant best practices Optimized footprint Johnson Controls 9 30% Gap Closure Targeted Annually Global Opportun
Slide 30: Automotive Experience: Vertical integration
Automotive Experience Vertical integration Goal: Become a market leader in each targeted product segment through In-depth component expertise Global product and process excellence Key elements of components business Innovation becomes a differentiator Create entry barriers A response to global sourc
Slide 31: Investing in profitable growth
Automotive Experience Investing in profitable growth Key levers Drive vertical integration Michel Thierry - textiles and integrated trim Become market leader in growth markets Support customer global platform needs Fill technology gaps Benoac Fergteile - slush skins Seton Group - leather wrapping of
Slide 32: Automotive Experience: Growth in China
Automotive Experience Growth in China Position in China 2010 China revenues: $3.1 billion (mostly unconsolidated) Market leader in seating (45% market share) Smaller niche player in interiors and electronics 47 manufacturing locations with 24 JVs 18,000 employees Full engineering and development cap
Slide 33: Technology and advanced development
Automotive Experience Technology and advanced development Johnson Controls 13 Innovation drives profitable growth 3-generation innovation approach delivers continuous product and process improvement Help customers differentiate vehicles and to delight consumers Identified 12 critical technology doma
Slide 34: Automotive Experience: Innovation
Automotive Experience Innovation Johnson Controls 14 2009 Ford World Excellence Award Recognition of Achievement Award for New Consumer- Focused Technology. 2010 Automotive News PACE Award For the development and launch of production of Polypropylene (PP) Thin Film interior surface technology. PSA P
Slide 35: Automotive Experience: Sustainability
Automotive Experience Sustainability Drive "Design for Sustainability" Leverage competitive advantage through Best- in-Class mass, energy and cost Expand portfolio of "green" materials Meet end-consumer demand and OEM expectations by creating "green" value proposition Drive energy efficiency best pr
Slide 36: To achieve our higher projected growth and returns, we will...
To achieve our higher projected growth and returns, we will... Enhance our competence and ability De-risk the business by managing our customer and supply base Increase our cost competitiveness via our operational excellence, quality performance and continuous improvement processes Differentiate thr
Slide 37: Automotive Experience: Vision
Automotive Experience Vision Profitable growth through product and process excellence and by leveraging our global capabilities Cost-leader for all major components Technology-leader #1 position in JIT #1 position in trim and foam #1 in metals and mechanisms Leader in each interior core product John
Slide 38: Johnson Controls Power Solutions
Johnson Controls 1 Power Solutions Alex A. Molinaroli Vice President and President, Power Solutions
Slide 39: Power Solutions: Business overview
Power Solutions Business overview The world's largest provider of battery power solutions for the vehicle original equipment and aftermarket 36% global market share for SLI batteries World-class customer base in the automotive aftermarket Original equipment (OE) batteries for the top automakers worl
Slide 40: Power Solutions: Global market leader
Power Solutions Global market leader Customer satisfaction culture Technology leadership Operational excellence Continuous improvement Global network Sustainability Superior brands Johnson Controls 3
Slide 41: Power Solutions: World-class customer base
Power Solutions World-class customer base Johnson Controls 4 General Motors Supplier of the Year AutoZone Extra Miler Award Interstate Battery Systems of America Service Excellence Award Subaru Exceptional Product Support Tianjin FAW Toyota Motor Company Quality Achievement Award YiQi Toyota Safety
Slide 42: Power Solutions: A growth business
Power Solutions A growth business Johnson Controls 5 Power Solutions has been a good business in a slow growth industry Good margins Steady demand due to stable aftermarket Annual market growth of 0-2% Today, double-digit growth business with margin improvement potential Global growth in distributio
Slide 43: Power Solutions: Market opportunity
(CHART) Growth in emerging markets due to economic development and GDP growth particularly in BRIC Power Solutions: A growth business Market opportunity ($B) implications for 2020 SLI-Mature SLI-Emerging Growth with government stimulus, technology & market development xEV Growth with shift in vehicl
Slide 44: Power Solutions: Transformation drivers
Power Solutions: A growth business Transformation drivers Government & Regulations Environmental regulations Mandated fuel efficiency Economic incentives Consumer Demands Higher content and vehicle-assist features Maintenance-free batteries Eco-friendly preferences Commodities Emerging market growth
Slide 45: Emerging Markets
Johnson Controls Emerging Markets Significant growth opportunities 8
Slide 46: Power Solutions: China
Power Solutions China Fastest growing market In the world 100M units/year by 2020 Rapid growth in OE production Developing aftermarket Power Solutions positioning for market leadership Maintenance-free technology OE customer relationships Distribution network Expanding manufacturing footprint: Shang
Slide 47: Power Solutions China: expanding manufacturing capacity
Changxing Plant with start of production in 2011 JCI Shanghai Plant & HQ Power Solutions China Johnson Controls 10 Expanding manufacturing capacity from <5M units to 30M by 2015 Initial focus on East and West regions leveraging current market strength Expanding aftermarket distribution Growing strat
Slide 48: Power Solutions China: Changxing plant
Power Solutions China - Changxing plant Johnson Controls 11 A world-class facility $150 investment utilizing our best manufacturing technology 8M batteries capacity 12M battery PowerFrame plate capacity Construction progressing to plan 400,000 square feet 600 employees Changxing Plant with start of
Slide 49: Power Solutions China: Chongqing plant
Power Solutions China - Chongqing plant Johnson Controls 12 Chengdu in Sichuan Province Growing concentration of OE manufacturers in the West Changan Auto, Dongfeng Motor, Honda, Volkswagen, Suzuki Consumer demand centers in Chengdu and Chongqing Over 20M people within the two capital cities Constru
Slide 50: Power Solutions: Korea
Power Solutions Korea Acquired 90% of existing Korean joint venture JV was part of acquisition of Delphi's battery business in 2005 Solid track record of profitable growth, with customers across Asia Increasing commitment to serve emerging markets in Asia Investing additional $40M to expand capacity
Slide 51: Power Solutions: South America
Brazil Venezuela Argentina Chile Colombia Power Solutions South America Growing market reaching 30M units by 2015 Power Solutions leadership #1 market share Technology leadership Expanding capacity in automotive and motorcycle batteries Extending our presence through joint venture with MAC S.A. (ann
Slide 52: Start-Stop Vehicles: A Growth Market
Johnson Controls Start-Stop Vehicles: A Growth Market 15
Slide 53: Power Solutions: Start-Stop vehicles
Power Solutions Start-Stop vehicles Johnson Controls 16 Improve fuel economy and lower emissions with minimum change to vehicle system Allow engine to shut off instead of idling while the vehicle is stopped Provides fuel efficiency gains and CO2 reductions of 5 to 12% No change to consumer driving p
Slide 54: Regional Start-Stop development
Power Solutions Regional Start-Stop development Johnson Controls 17 North America Limited adoption through 2015 Market resistance to diesel technology Adoption barriers include automatic transmission and air conditioning Emphasis on HEV approaches Europe Primary market for Start-Stop 16M units by 20
Slide 55: Start-Stop vehicles: largest provider and AGM battery
Power Solutions Start-Stop vehicles Johnson Controls 18 Johnson Controls is the largest provider of Start-Stop vehicles More than 1.5 million Start-Stop vehicles in Europe supplied annually by Johnson Controls Demonstrated track record using AGM for Start-Stop applications OEMs focusing launches in
Slide 56: Accelerating demand for Start-Stop batteries
Power Solutions Accelerating demand for Start-Stop batteries Johnson Controls 19 We expect aggressive growth in Start-Stop battery demand Accelerating transition by OEMs - particularly in Europe In last six months market demand outlook has increased by ~30% Rapid increase driven by higher than expec
Slide 57: Power Solutions: Market leadership
Power Solutions Market leadership Johnson Controls 20 Full utilization of installed capacity throughout 2010 Will exceed 7M unit capacity in Germany by 2011 Expanding global manufacturing network to support OEM partners Adding production in Europe, North America and China Preparing for significant a
Slide 58: Advanced Batteries for xEVs
Johnson Controls Advanced Batteries for xEVs Lithium-ion hybrid batteries 21
Slide 59: Lithium-ion hybrid batteries: first U.S. manufacturing site
Lithium-ion hybrid batteries First U.S. manufacturing site: Meadowbrook Assembly plant is in operation and shipping batteries Began pack assembly in September 2010 10 months from U.S. ARRA matching grant to shipping batteries to our customers On schedule to begin cell manufacturing in early 2011 Cap
Slide 60: Lithium-ion hybrid batteries: nascent industry characteristics
Lithium-ion hybrid batteries Nascent industry characteristics Rapidly changing /expanding competitors: overcapacity Multiple business models by customer Working with customers, suppliers and governments to shape industry and fuel growth Today's investments required to participate in the industry as
Slide 61: Power Solutions: Continuing to create value in our core
Johnson Controls Power Solutions: Continuing to create value in our core 24
Slide 62: Driving increases in profitability: Operational excellence
Driving increases in profitability Operational excellence 20%... Manufacturing productivity improvement versus 2008 53%... Reduction in lead scrap rate in Americas versus 2008 37%... Reduction in lead scrap rate in EMEA versus 2008 $120M... Projected annual savings through CI in 2010 14%... Working
Slide 63: Vertical Integration: Garcia, Mexico Recycling Facility
Power Solutions: Value Creation in Core Business Vertical Integration: Garcia, Mexico Recycling Facility Johnson Controls 26 Secure access to lead and reduce price volatility 132,000 MT/year capacity Meets new U.S. EPA 0.15 microgram standard for lead emissions Ability to expand in the future if nee
Slide 64: Vertical Integration: Florence, South Carolina Recycling Facility
Power Solutions: Value Creation in Core Business Vertical Integration: Florence, South Carolina Recycling Facility Johnson Controls 27 Received air permit for a new, fully-integrated battery recycling facility First permit issued in U.S. in nearly 20 years Strong collaboration with state and local o
Slide 65: Power Solutions: Summary
Power Solutions Summary Johnson Controls 28 Growth business Distribution and brands Emerging markets Start-Stop vehicles Advanced energy storage for xEVs Value creation in core operations Operational Excellence Vertical Integration
Slide 66: Building Efficiency
Building Efficiency Dave Myers Vice President and President, Building Efficiency
Slide 67: Building Efficiency overview
Johnson Controls Building Efficiency Johnson Controls makes buildings in 125 countries more comfortable, productive and safe Our offerings are necessary to provide a comfortable indoor environment at the lowest operating cost Working with Johnson Controls delivers a payback: reduced energy and impro
Slide 68: Building Efficiency: Highlights
Building Efficiency Highlights Markets appear to be recovering or growing but some are faster than others Investments in energy and other capabilities to provide multiple growth platforms Both near-term and long-term growth opportunities coming from emerging markets Investments in talent critical to
Slide 69: Non-residential buildings: Profitable, sustainable growth
Building Efficiency: Non-residential buildings Profitable, sustainable growth The global HVAC service market remains a significant but highly fragmented opportunity Market trends for energy efficiency, climate change legislation and outsourcing will drive increasing demand Service team has the large
Slide 70: Building Efficiency: Global platform
Building Efficiency Global platform Middle East $0.5B Asia $1.7B With over 500 locations worldwide we have the platform to drive growth globally, extending from our historical strength in North America Branches: 149 Mfng: 15 Branches: 30 Mfng: 1 Branches: 161 Mfng: 4 Branches: 17 Mfng: 3 Branches: 1
Slide 71: Global markets: Non-residential construction
(CHART) Asia M.E. W. Europe N. A. E. Europe Global Non-Residential Construction: 2008-2016 Market Overview Global markets Market Developed regions showing declines in 2010 with spending starting to recover in second half of 2011 Near and long-term growth to come from emerging markets Expected constr
Slide 72: Key growth opportunities
Key growth opportunities Increased range of energy solutions Growth in Systems and Services through the lifecycle Expanded Global Workplace Solutions Emerging markets Johnson Controls 7 7
Slide 73: Increased range of energy solutions
Johnson Controls Increased range of energy solutions Key growth opportunities 8
Slide 74: U.S. energy solutions market forecast: 2010-2015
9 U.S. energy solutions market forecast: 2010-2015 Billions of Dollars 12% CAGR Source: Pike Research Energy solutions market continues to grow rapidly as legislation and private sector adoption take hold and we are seeing significant growth in our Energy business Energy solutions Market dynamics Cl
Slide 75: Energy solutions: business today
Energy solutions Solutions and energy retrofit business today ~40% increase in orders secured YTD ~30% increase in Energy Solutions employees YTD 11% increase in Energy Solutions Salespeople 44% increase in Energy Engineers 1000+ dedicated energy professionals globally Successful North America Energ
Slide 76: Energy solutions: Key growth strategies
Lighting retrofits Water Efficiency Solutions Private Sector Utilities Channel Dedicated resources and investment Policy development with EU Target countries with favorable legislation Energy engineering and performance Energy solutions Key growth strategies 11 Expanding on core competencies New cha
Slide 77: Energy solutions: new markets and offerings
Energy solutions Key growth strategies 12 New markets New offerings New markets and offerings Leverage GWS Channel Central plant asset management Onsite renewable energy Enterprise energy management Ex: GWS as channel for Energy Solutions Johnson Controls
Slide 78: Energy solutions customer example: University of Massachusetts Amherst
Energy solutions - customer example University of Massachusetts Amherst Johnson Controls 13 The challenge: Make campus-wide improvements to reduce energy costs and meet sustainability goals. The solution: Comprehensive energy and water conservation improvements with $40 million worth of retrofits an
Slide 79: Energy solutions: Key enabling technologies for growth
Energy solutions Key enabling technologies for growth 14 Energy solutions includes an ever-expanding set of technologies. We are developing capabilities and working to understand and deploy the most impactful ones for growth. Renewable energy technology Smart grid applications Lighting technologies
Slide 80: Growth in systems and services through the lifecycle
Johnson Controls Growth in systems and services through the lifecycle Key growth opportunities 15
Slide 81: Typical building lifecycle: Securing customers for life
Typical building lifecycle Securing customers for life Johnson Controls 16 Plan and design Build Commission Optimize and maintain Efficient, optimized buildings affect property values, lease rates, occupancy and sales per sq. ft. Efficient systems reduce energy use Linking multiple systems improves
Slide 82: Systems market: Global market opportunity
Systems market Global market opportunity Johnson Controls 17 Source: 2009 industry size (BSRIA, ARC); Growth Rates July 2010 (Global Insight) *Total Global Services Market = $107B - JCI is targeting segments within that totaling $48B (CHART) VRF $2B Rooftops $2B Ducted Splits $3B Chillers $7B Airsid
Slide 83: Systems: Key growth strategies
Systems Key growth strategies Global channel investments to increase market coverage Expand market access by adding to our HVAC system portfolio Expand systems integration capabilities and grow bundled technology business in emerging markets Build scale in Security and Fire Invest in tools that make
Slide 84: Systems North America customer example: University of Minnesota
Systems North America - customer example University of Minnesota Johnson Controls 19 "Johnson Controls has been very receptive to assisting us with technology challenges... Johnson Controls even invited us to participate in alpha and beta testing of their products, which gave us the confidence requi
Slide 85: Services market: Global market opportunity
Services market Global market opportunity Source: 2009 industry size (BSRIA, ARC); Growth Rates July 2010 (Global Insight) *Total Global Services Market = $107B - JCI is targeting segments within that totaling $48B (CHART) N.A. $21B Europe $13B Asia $12B L.A. $1B M.E. $1B Services market targeted*:
Slide 86: Services: Key growth strategies
Services Key growth strategies Tools and practices to build customer loyalty Market by market targeting in top 25 cities Geographic expansion / penetration Energy efficiency and sustainability Operational excellence for productivity / enhanced cost competitiveness 21 1. 2. 3. 4. 5. We offer a range
Slide 87: Residential and light commercial: Key growth initiatives
Residential and light commercial Key growth initiatives - channels Increase existing channels Increase footprint / fill whitespace Selectively flip distributors Deliver world class customer experience 22 1. 2. 3. 4. JCI 2010 actions and results Revenue increased by 14% Earnings increase of $80M+ Res
Slide 88: Systems and service: Key enabling technologies
Systems and service Key enabling technologies 23 Systems integration New HVAC technology Simple energy efficiency retrofits 1. 2. 4. We continue to make investments in technology to enable differentiated products and meet customer requirements NxGen service platform 3. Johnson Controls
Slide 89: Building a solution for the future: Technology roadmap
Building a solution for the future Technology roadmap Scalable platform Low cost entry point Easy to use Open framework capable of incorporating third party components and applications Backward and forward compatibility Integrate with Metasys installed base Enable future, still unknown, integration
Slide 90: Building a solution for the future: Technology roadmap
Building a solution for the future Technology roadmap Smart electrical distribution Smart equipment Smart security components Customer benefits: Easy to use Flexible Reduced energy use Lower operating costs Backward compatibility Johnson Controls 25 Existing BAS Enterprise data integration and analy
Slide 91: Smart buildings for smart grids
Building a solution for the future Smart buildings for smart grids 26 Connecting across the enterprise Connecting building systems Connecting to the global environment Connecting to the bottom line Connecting to the smart grid Johnson Controls
Slide 92: Expanded Global Workplace Solutions
Johnson Controls Key growth opportunities Expanded Global Workplace Solutions 27
Slide 93: Global Workplace Solutions: Business today
Global Workplace Solutions Business today Manage over 1.5 billion sq. ft. in 72,000 locations globally; >18,000 employees in 75 countries Strong in segments with a high degree of critical facilities and geographic dispersion Established relationships with Fortune 1000 channel Pipeline increased 8% Y
Slide 94: Global Workplace Solutions: Market dynamics
Global Workplace Solutions Market dynamics Globalization / integration driving customers to seek more strategic and tailored solutions for their entire portfolio i.e. Energy and GHG management, space utilization, asset management Convergence of energy technology and information technology Emergence
Slide 95: Global Workplace Solutions customer example: Agilent Technologies
Global Workplace Solutions - customer example Agilent technologies Johnson Controls 30 consolidation opportunities. "We truly appreciate the remarkable speed in which Johnson Controls reacted to our request for savings and the spirit demonstrated by the entire Johnson Controls account team in rising
Slide 96: Global Workplace Solutions: Key enabling technologies for growth
Global Workplace Solutions Key enabling technologies for growth 31 We are developing and partnering to create energy and cost saving solutions across our customers' entire portfolio Standard global operations platform Integration w/ partner technologies Space utilization metrics Enterprise energy ma
Slide 97: Emerging markets
Johnson Controls Key growth opportunities Emerging markets 32
Slide 98: China: market conditions and initiatives
China Market conditions Government continues to focus on completing infrastructure projects for sustaining economic growth Increased awareness of energy conservation Continued investment in infrastructure of 11% annually Initiatives Broaden product portfolio First-cost versions of HVAC offerings Con
Slide 99: Middle East: market conditions and initiatives
Middle East Market conditions Despite significant drop in economic growth in 2009 (Dubai), forecasts show rebound in 2011 with majority of growth coming from Abu Dhabi and Saudi Arabia Growth driven by significant investment in infrastructure projects 2011 will match 2008 construction levels Initiat
Slide 100: Middle East customer example: City of Mecca
35 City of Mecca Middle East - customer example Major central plant - Mecca, Saudi Arabia The challenge: To provide a comfortable and energy efficient environment for the expansion of major infrastructure facilities. The solution: Provide multi-stage York OM chiller products (total capacity 120,000
Slide 101: Brazil: market conditions and initiatives
Brazil Market conditions Strong commercial construction activity driven by investment in infrastructure for Olympics and World Cup $200M potential opportunity for HVAC systems and technology contracting over the next 3 years Projects related to new arenas for the World Cup Security projects for the
Slide 102: Margin improvement actions
Johnson Controls Margin improvement actions 37
Slide 103: Margin improvement actions
Margin improvement actions Productivity improvements in Service and Systems Business process simplification Sales demand management Back office processes Selection tools Improving mix of business - higher service work, growth in China and Middle East Vertical integration Scale - leverage as we grow
Slide 104: Investing for profitable growth: Summary
Investing for profitable growth Summary Build world-class people resources to enable and support growth 1000+ LEED professionals 1000+ Energy Engineers 15,000+ Field service technicians Global expertise in energy efficiency and renewables Firmly establish leadership position in global growth markets
Slide 105: Financial Outlook
Financial Outlook R. Bruce McDonald Executive Vice President and Chief Financial Officer
Slide 106: Fiscal 2011 key assumptions
Fiscal 2011 key assumptions Fiscal 2011 key assumptions Johnson Controls 2
Slide 107: Fiscal 2011 key assumptions
Fiscal 2011 key assumptions Euro $1.35 in 2011 Tax rate 19% in 2011 Geographic mix of income Low 20% range in 2012 and 2013 Pension contribution Discretionary funding of approximately $200-$250 million Financing costs Stable short term interest rates Commodities Inflation returning Copper hedges Ind
Slide 108: Fiscal 2011 outlook
Fiscal 2011 outlook Johnson Controls 4 4
Slide 109: Automotive Experience: 2011 Financial outlook
Automotive Experience 2011 Financial outlook Sales up approximately 5% Higher volumes in North America, Europe and China Growth in emerging markets Largely via unconsolidated joint ventures Higher three-year backlog (+60%) Segment margin 4.5% - 4.7% (up 90 bps) Benefits of restructuring and continuo
Slide 110: Power Solutions: 2011 Financial outlook
Power Solutions 2011 Financial outlook Sales up 11 - 15% Higher volumes across all regions Market share growth Incremental volumes from Wal-Mart and Korean acquisition Segment margin 13.4% - 13.6% (up 90 bps) Manufacturing process efficiency improvements Vertical integration (Mexico smelter begins p
Slide 111: Building Efficiency: 2011 Financial outlook
Building Efficiency 2011 Financial outlook Sales up 8-10% Strong backlog in the emerging markets and Energy Solutions Emerging market growth, partially offset by mature markets (flat) Double digit growth in Residential and Global Workplace Solutions (GWS) Moderate recovery in service demand Segment
Slide 112: Organic investments: capital investment trend
Organic investments Johnson Controls 8 ($ in millions) (CHART) $807 $647 $758 $1,200 Capital investment trend
Slide 113: Organic investments: AGM, lithium-ion, launches
Organic investments Johnson Controls 9 AGM (Start-stop) $350 million - 5 years Lithium-ion Hybrid $225 million - 5 years Automotive Launches $225 million - 3 years
Slide 114: Organic investments: vertical integration, geographic expansion
Organic investments Johnson Controls 10 Vertical Integration $170 million - 2 years Geographic Expansion $550 million 5 years
Slide 115: Capital allocation
Capital allocation Johnson Controls 11 11 Cash flow deployment Strategic acquisitions Discretionary pension funding Improve credit metrics Dividend payments Dividends Consecutive dividends paid since 1887 Intend to increase payout ratio to 30% over time Typical timing - November communication