Johnson Controls eyes growth in Fire and Security

CORK, Ireland—As Johnson Controls implements a new business system to drive overall long-term success, CEO Joakim Weidemanis recently told investors that he sees an opportunity to expand and grow the company’s Fire and Security segment. 

Competitive landscape and product strategy 

During the company’s Q3 conference call with investors, Weidemanis was asked about how the company can accelerate growth in Fire and Security, and how the segment can work together with the HVAC segment to achieve a greater business outcome.  

“These are fundamentally different businesses serving a similar customer base, but different personas at different points in time, and so we're calling it as it is,” he told investors. “That doesn't mean that they aren't businesses that don't have potential. They have potential, as well. We think that HVAC inherently has higher levels of growth, but there's growth in Fire and Security, as well.”   

Weidemanis was asked about the margin potential and growth outlook in Fire and Security, with Honeywell and Allegion putting up “pretty decent numbers” - as the investor called it – during the last quarter or two.   

“They've (Honeywell) done a very nice job on the product portfolio over many, many years,” he said. “When I talked about us having some product gaps in our portfolio, I was thinking about fire detection as one example. We play a little bit more on, let's call it, the premium or the more sophisticated system side of the market. We have some opportunities to go beyond that over time.”  

Business system transformation 

Weidemanis explained that Johnson Controls’ new business system, part of the company’s ongoing transformation, will be anchored in methodologies like 80/20 and Lean, and augmented with digitization and AI to achieve three business goals – simplify, accelerate and scale.  

“The approaches that I described, we are gradually going to deploy into those businesses, and we think there's good potential to improve the performance there, as well, over time,” he noted. “We are two-plus months into a deeper strategic review of our businesses where we're at today and looking at the future and who we would like to be. Over the next couple of months, we're going to start to draw conclusions on what the portfolio will look like going forward.” 

Looking ahead 

Overall, Johnson Controls achieved strong Q3 results, “continuing the momentum we've sustained throughout the year,” Weidemanis said, with organic sales growing 6%, segment margins expanding 20 basis points to 17.6%, and adjusted EPS growing 11%, exceeding its guidance.  

“We have an exciting future ahead of us here at Johnson Controls,” he said. “We have a lot of work underway and many opportunities to unlock. With a culture centered around our growth business system, I'm confident that our increased focus on our customers will allow us to continue to win with them.”