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Message to Stakeholders

Winning on Our Strengths

I am pleased to report the vision we established for Johnson Controls three years ago is now a reality. Our transformative journey was completed by our historic merger with Tyco and the separation of our Automotive Seating business into Adient. Johnson Controls today is a multi-industrial company uniquely positioned as a leader in building and energy storage solutions and technologies.

Alex Molinaroli

Alex Molinaroli

We are well-positioned to deliver strong results in 2017 and beyond, building on terrific momentum, an enterprise-wide operating system for growth and profitability, and the commitment to help our customers win everywhere, every day.

Key global megatrends involving shifting demographics, urbanization, energy, sustainability and digitalization are driving demand for the essential technologies and services and solutions Johnson Controls provides around the world.

These trends are particularly strong in Asia, where we serve the market with 48 production sites, five technology centers and hundreds of branches and sales offices. In spring 2017, we will bring our Asia Pacific businesses under one roof in our new headquarters in Shanghai. The headquarters will also receive China’s Three Star Green and LEED Platinum building certifications. The headquarters has already been awarded the first design-phase EDGE certification for an office building in China from IFC-World Bank. It is expected to achieve 44 percent total energy savings, 42 percent water savings and 21 percent embodied energy in materials savings versus traditional buildings in the market.

Amidst our transformation we delivered another exceptional year of financial results. The strong performance by our businesses combined to produce $37.7 billion in revenue including Adient revenue and one month of Tyco sales, and $3.98 earnings per share from continuing operations.

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Building Technologies & Solutions, formed by the combination of our legacy Building Efficiency business and Tyco, delivered $23 billion pro forma in sales in FY2016. The Johnson Controls Hitachi joint venture, launched in October 2015, performed exceptionally well and contributed significantly to this growth. In North America, we saw growing momentum in new orders, particularly in the vertical markets of healthcare and education. In China, we are building on an already strong market position to continue to drive growth in all segments of our HVAC equipment and controls businesses.

Power Solutions delivered $7 billion in sales fueled by new products and investments in Start-Stop technology. In 2016, we shipped over 152 million batteries, an increase of 4 percent over 2015. To meet the rising demand for Start-Stop vehicles in China, we are expanding capacity for Absorbent Glass Mat (AGM) batteries. As a result of steady demand in aftermarket replacements, which accounts for over 75 percent of Power Solutions’ business, we are increasing capacity by 10 million batteries in the U.S. to grow production capability.  

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Automotive Experience (now Adient) achieved sales of $17 billion on strong seating volume and record profitability. 

Following the close of the merger with Tyco on September 2, we are well into the integration process, working as one team. In just a few months, we are realizing our synergy targets for FY 2017 and making significant progress toward the promised $1 billion in cost synergies by 2020.

Alex Molinaroli

Portfolio Changes

Leveraging the Johnson Controls Operating System across our portfolio is a key part of reaching synergy and is the foundation for strategic growth and advancing our position to become the most operationally capable company in the world. Across our businesses we are achieving improvements in speed, quality, employee retention, customer experience and productivity. We doubled our year-over-year continuous improvement in variable manufacturing costs, raised quality by 12 percent, improved employee retention by 70 percent and increased our customer satisfaction measures by 9 percent.  

The New Johnson Controls

The new Johnson Controls has a talented executive management team and a board of directors committed to shareholder value. We are well-positioned to deliver strong results in 2017 and beyond, building on terrific momentum, an enterprise-wide operating system for growth and profitability, and the commitment to help our customers win everywhere, every day. By focusing on significant value creation, staying committed to disciplined capital allocation and accelerating our growth from a leadership position in markets where we can win, I am confident we have the right focus to drive near-term performance and long-term value.

I want to thank our 130,000 employees for their remarkable dedication and accomplishments. I also want to thank George Oliver, our chief operating officer and former CEO of Tyco, and Bruce McDonald, former vice chair of Johnson Controls and new CEO of Adient, for their leadership and collaboration throughout our transformation. I couldn’t be more proud of our accomplishments and excited for our future opportunities as we strive to deliver a safe, comfortable and sustainable world. Thank you for your continued support.

Alex Molinaroli
Alex Molinaroli
Chairman, President and Chief Executive Officer