Johnson Controls' headquarters in Glendale, Wis. Photo credit: Johnson Controls

Johnson Controls (NYSE:JCI) reported its earnings for the first quarter of 2013 on Tuesday: net income of $148 million, or $0.21 per share, on $10.4 billion in sales.

That was down from year-ago results, but it was expected – tough conditions in Europe have weighed on just about everybody associated with the global auto business. Net income was near the upper end of management's previous guidance, and in line with Wall Street expectations.

More importantly for investors, CEO Stephen Roell reaffirmed previous guidance, saying that he expects things to improve over the next two quarters as restructuring moves take hold.

Strength at home offset by ongoing Europe weakness
Johnson Controls has three major business units. Here's how they each did in the most recent quarter:

  • Building efficiency, which makes control systems (heating, cooling, security) for big buildings and provides support services for them, had $139 million in revenue on $3.5 billion in sales. Revenues were roughly flat, but sales were down 3% from the year-ago quarter. Higher sales of systems in North America were offset by lower revenues in Europe, Asia, and in the unit's North American service business. Orders were down during the quarter, but executives noted that the company is seeing signs of improvement in some markets.
  • Automotive experience, a major-league supplier of parts and assemblies to global auto giants like Ford (NYSE:F) and Toyota (NYSE:TM), saw revenues drop to $103 million on sales of $5.4 billion. Higher revenue in North America was more than offset by lower sales in Europe, where new-car sales are hovering near a 20-year low. Johnson Controls has been restructuring its European auto supply operations, and expects improvement in the next two quarters as those changes take hold.
  • Power solutions, which makes car batteries and other "energy storage solutions", had a nice quarter, with income up 11% to $221 million on sales of $1.6 billion, a 10% increase over sales in the year-ago quarter. Volumes were down in Europe – again, no surprise – but unit shipments were on the rise in Asia and North America.

The company had little to say about its efforts to sell its automotive electronics business, part of the automotive experience unit. Johnson Controls had hired JPMorgan back in March to help it explore a potential sale of the business, a move that caused much speculation on Wall Street. But no update was forthcoming on Tuesday: Expect an update in "three to four months", the company said in a statement.

Looking ahead: Some improvement is coming
Europe continues to be an area of exposure for the company, though like his company's clients Ford and General Motors (NYSE:GM), Roell has moved to restructure in response to what is likely to be chronic weakness in auto sales in the region.

Those changes are expected to take hold over the next couple of quarters, and they should lead to some bottom-line improvements. In addition, the building efficiency unit will see a seasonal increase through spring and summer due to likely upticks in construction in Northern Hemisphere areas.

The upshot: Roell said in a statement that he is "confident" that results will improve over the next two quarters, and the company is "comfortable" with the Wall Street consensus estimate of $0.75 a share for next quarter's earnings.

Motley Fool contributor John Rosevear owns shares of Ford and General Motors.Follow him on Twitter at @jrosevear. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford and JPMorgan Chase & Co. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.