Why did JCI's net profit drop sharply in Q2 2024?

Johnson Controls Intl (JCI) reported a net loss of $(277) million in Q2 2024, which can be attributed to several key factors: 1. **Revenue Decline in Global Products and Building Solutions Asia Pacific**: The Global Products segment saw revenues decline by 3% year-over-year to $2.40 billion, primarily due to a decrease in the global Residential HVAC business. Meanwhile, the Building Solutions Asia Pacific segment experienced a 26% revenue decrease to $491 million, stemming from challenging end-market conditions in China. 2. **Cost of Sales and Gross Profit Impact**: The cost of sales for JCI increased by 1.6% year-over-year, reaching $4.52 billion. Consequently, the gross profit decreased by 2.7% to $2.18 billion, and the margin compressed by 90 basis points to 32.6%. This indicates that despite higher revenues, the company's profitability was negatively affected by increased costs. In summary, the net profit drop in Q2 2024 was primarily due to revenue declines in key segments and increased costs, leading to a compression of gross margins.