DOW JONES NEWSWIRES
Honeywell International Inc.'s (HON) third-quarter earnings fell 15% on continued weakness in sales, especially to commercial airlines, as the company lowered its 2009 revenue guidance.
The company, which makes aircraft engines and automation and transportation products, now expects $31 billion in 2009, down $500 million from its view in July. The cut same as the quarter's revenue was at the low end of Honeywell's estimate, though earnings topped views.
At some point, customers in Honeywell's markets for aerospace, automotive and building equipment will need to restock thin inventories. But earlier this week, Honeywell said demand for business jets, already near a five-year low, is likely to erode further before rebounding slowly in 2011.
That contrasts with bellwethers General Electric Co. (GE) and 3M Co. (MMM), which showed signs of shaking off the recession's grip in the third quarter and were sunnier about things to come.
Chairman and Chief Executive Dave Cote said that Honeywell is preserving its industrial base and continuing to build a robust pipeline for a global market, which he said would result in a much stronger company on the other side of the current recession.
Honeywell posted a profit of $608 million, or 80 cents a share, from $719 million, or 97 cents a share, a year earlier. The latest results included a 4-cent boost from lower-than-expected tax expenses, which Honeywell said would be offset on a full-year basis by a higher tax rate in the current quarter.
Net sales fell 17% to $7.7 billion.
In July, the company said it expected earnings of 70 cents to 75 cents on revenue of $7.7 billion to $8.1 billion. That was below analysts' estimates at the time.
The aerospace business posted a 16% decline in revenue and a 12% drop in profit, mostly due to lower sales volumes to commercial aerospace, though margins rose and original equipment sales for military platforms and logistics grew.
Sales for its automation and control systems segment slid 14% and earnings were flat and margins climbed. Growth in emerging markets and boosts from acquisitions and divestitures offset unfavorable currency exchange effects and slower economic growth elsewhere.
Shares in Honeywell, which affirmed its full-year earnings view, closed Thursday at $38.53 and weren't active premarket.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; joan.solsman@dowjones.com