Analysis of Property, Plant and Equipment
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Property, Plant and Equipment Disclosure
Johnson Controls International plc, balance sheet: property, plant and equipment
US$ in millions
Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30).
- Buildings and improvements
- This category shows a significant decline from 2018 to 2022, dropping from 2,537 million USD to 1,300 million USD, reflecting a substantial reduction in recorded value or possible disposals. However, in 2023, there is a slight recovery to 1,337 million USD, indicating some level of reinvestment or asset revaluation.
- Subscriber systems
- There is a generally upward trend with values increasing from 573 million USD in 2018 to 823 million USD in 2023. Despite a small decrease in 2022 compared to 2021, the overall trend reflects growth in this asset category, suggesting ongoing investment or expansion in subscriber system assets.
- Machinery and equipment
- Machinery and equipment show a sharp decrease between 2018 and 2019, falling from 6,049 million USD to 2,969 million USD. From 2019, the category rebounds steadily, reaching 4,227 million USD in 2023, indicating a recovery and likely reinvestment or new acquisitions in machinery and equipment over these years.
- Construction in progress
- This category declines sharply from 1,324 million USD in 2018 to 327 million USD in 2020, followed by gradual increases through 2023, reaching 540 million USD. This pattern suggests completion of prior construction projects followed by initiation of new ones.
- Land
- Land assets steadily decrease from 363 million USD in 2018 to 194 million USD in 2023. This decline may indicate asset sales or revaluation adjustments over the period.
- Property, plant and equipment, gross
- The gross value of property, plant, and equipment declines sharply from 10,846 million USD in 2018 to 5,844 million USD in 2019, then remains relatively stable with slight fluctuations, ending at 7,121 million USD in 2023. The sharp drop in 2019 is notable, possibly related to asset disposals, reclassification, or accounting changes.
- Accumulated depreciation
- Accumulated depreciation increases in absolute value from -4,675 million USD in 2018 to -3,249 million USD in 2022 before rising again significantly to -3,985 million USD in 2023. The fluctuations could reflect changes in asset base and depreciation policies, with a notable acceleration in depreciation expenses in the most recent period.
- Property, plant and equipment, net
- Net property, plant, and equipment values drop from 6,171 million USD in 2018 to a low of 3,042 million USD in 2022, with a slight recovery to 3,136 million USD in 2023. The net values trend generally downward, broadly mirroring the gross asset trends mitigated by accumulated depreciation.
Asset Age Ratios (Summary)
Johnson Controls International plc, asset age ratios
Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30).
- Average Age Ratio
- The average age ratio has demonstrated a consistent upward trend over the analyzed period from 2018 to 2023. Starting at 44.6% in 2018, the ratio slightly increased to 44.62% in 2019, indicating a relatively stable asset age in the initial years.
- From 2019 onwards, there is a noticeable increment each year. In 2020, the ratio rose to 50.47%, reflecting a higher average age of property, plant, and equipment assets. This aging trend continued with the ratio reaching 52.31% in 2021 and 53.31% in 2022.
- The most significant increase occurred between 2022 and 2023, where the ratio jumped from 53.31% to 57.53%. This suggests that the assets are progressively aging without a proportional increase in new asset acquisitions or replacements.
- Overall, the data points to an increasing average age of the company’s property, plant, and equipment, which may imply potential future requirements for capital expenditure to renew or upgrade the asset base to maintain operational efficiency.
Average Age
Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30).
2023 Calculations
1 Average age = 100 × Accumulated depreciation ÷ (Property, plant and equipment, gross – Land)
= 100 × ÷ ( – ) =
- Accumulated Depreciation
- The accumulated depreciation shows a fluctuating pattern over the period, initially decreasing from 4675 million USD in 2018 to 2496 million USD in 2019. It then generally increased from 2496 million USD in 2019 to 3985 million USD in 2023, with slight declines and increases in the intermediary years. This indicates varying depreciation charges or possible asset disposals and revaluations throughout the years.
- Property, Plant and Equipment, Gross
- The gross value of property, plant, and equipment declined significantly from 10846 million USD in 2018 to 5844 million USD in 2019. Following this sharp drop, the value showed a gradual increase from 2019 to 2023, rising to 7121 million USD. The initial decrease suggests substantial asset disposals or reclassification, while the subsequent increase indicates reinvestment or asset acquisitions.
- Land
- The value attributed to land steadily decreased from 363 million USD in 2018 to 194 million USD in 2023. This continuous decline may reflect disposals or revaluation adjustments of land assets over the years.
- Average Age Ratio
- The average age ratio, representing the proportion of accumulated depreciation to gross property, plant, and equipment, shows a clear increasing trend from 44.6% in 2018 to 57.53% in 2023. This indicates that the asset base is aging, with a higher percentage of the asset cost being depreciated over time.
- Overall Observations
- Between 2018 and 2019, there was a significant restructuring or disposal of assets as evidenced by the sharp drop in both gross property, plant and equipment and accumulated depreciation. From 2019 onwards, the company appears to have stabilized and incrementally increased its asset base, while its land holdings consistently decreased. The rising average age ratio suggests an aging asset base, which may imply upcoming replacement or maintenance needs.