The US multinational, multi-industrial, 170,000 employees strong company has seen its stock rise the most in six months as it taps a profitable partnership for the auto-interiors business through a joint venture with China’s Yanfeng Automotive Trim Systems Co.
According to the company, Johnson Controls is lately working on reducing its reliance on the cyclical auto industry, while also targeting efforts to build up efficiency among its many businesses. The company sold its auto-electronics unit to Visteon Corp. at the start of the year and was now searching for viable options for the interiors division, that builds door and instrument panels – as the unit’s profits constantly dropped since 2011.
“We expect to get dividends and not put cash into this,” said Chief Executive Officer Alex Molinaroli. “We think we’re going to benefit from the growth that’s going to come in that marketplace.”
According to the US and Chinese companies, Yanfeng would have 70% of the joint-venture’s shares, with a projected revenue of $7.5 billion as the pact lets Johnson Controls tap into the highly lucrative auto interiors business in China.
Johnson Controls Inc.’s shares rose 4.3% to reach $46.69 at the close in New York after the joint announcement, marking the biggest rise in stock since November 21, 2013.