Johnson Controls Reports $526 Million Net Income in Q2 Fiscal 2025, Plans HVAC Divestiture

Johnson Controls International plc reported its financial results for the second quarter of fiscal 2025, revealing a net income of $526 million, a significant recovery from a net loss of $234 million in the same period last year. For the six months ended March 31, 2025, the company achieved a net income of $977 million, compared to $170 million in the prior year. Revenue for the quarter increased by 1% to $5.676 billion, while year-to-date revenue rose by 3% to $11.102 billion. The growth was primarily driven by organic sales increases across various segments, despite challenges from foreign currency translation and the impact of divestitures.

The company noted a substantial improvement in gross profit, which rose by 8% to $2.069 billion for the three months ended March 31, 2025, and also increased by 8% to $3.995 billion for the six-month period. This improvement was attributed to better margins from backlog conversion and a favorable mix of higher-margin projects in the Building Solutions segments. Selling, general, and administrative expenses (SG&A) decreased significantly, down 31% to $1.427 billion for the quarter, largely due to the absence of prior year costs related to the water systems AFFF settlement.

Strategically, Johnson Controls is in the process of divesting its Residential and Light Commercial HVAC business to Bosch for approximately $8.1 billion, with the transaction expected to close in the second half of fiscal 2025. This divestiture is part of the company's broader portfolio simplification strategy aimed at focusing on its core building solutions business. Additionally, the company has initiated a multi-year restructuring plan expected to incur approximately $400 million in one-time costs, with anticipated annual savings of around $500 million once fully implemented.

Operationally, Johnson Controls reported a backlog of $16 billion as of March 31, 2025, reflecting a 12% year-over-year increase, indicating strong future demand for its products and services. The company also experienced growth in its Building Solutions segments, particularly in North America and Asia Pacific, where organic sales increased significantly. However, the Global Products segment saw a decline in sales due to the impact of divestitures and unfavorable currency translation.

Looking ahead, Johnson Controls remains optimistic about its growth trajectory, driven by increasing demand for smart and sustainable building solutions. The company plans to leverage its digital capabilities and product portfolio to meet evolving customer needs while navigating macroeconomic challenges, including inflation and geopolitical tensions. The management emphasized its commitment to maintaining a strong financial position and returning value to shareholders through share repurchases and dividends.