Honeywell International Cuts Revenue Guidance
July 22 2016 - 8:09AM
Dow Jones News
By Austen Hufford
Honeywell International Inc. posted revenue and profit gains in
its latest quarter but cut its revenue forecast for the year as the
company saw core organic sales fall in its three business
units.
Shares in the company, up 3.9% over the past three months, slid
1% to $117.50 in premarket trading.
Honeywell now expects annual sales of between $40 billion to
$40.6 billion, down from its previous guidance for sales between
$40.3 billion and $40.9 billion. It also increased the low end of
its earnings-per-share guidance for the year by 5 cents, now
expecting between $6.60 to $6.70.
Honeywell makes products ranging from air conditioners and
commercial boilers to airplane-cockpit controls and industrial
gloves. The company also is varied across geographies and generates
about half of its revenue outside the U.S.
Last month, Honeywell said Chief Executive Dave Cote would step
down in March after a 14-year tenure. Mr. Cote, who turns 64 next
month, will be succeeded by Darius Adamczyk, who was named the
company's president and chief operating officer in April. Mr. Cote
will continue as executive chairman through April 2018, and then
start a five-year consulting and noncompete agreement.
For the quarter, Honeywell reported a profit of $1.28 billion,
or $1.66 a share, up from $1.19 billion, or $1.51 a share, a year
prior.
Revenue grew 2.2% to $9.99 billion. Core organic sales fell
overall by 2%.
Analysts polled by Thomson Reuters projected $1.64 in per-share
profit on $10.13 billion in sales.
Honeywell also announced that its automation and control
solutions segment would be split into two smaller units -- home and
building technologies, and safety and productivity solutions.
"Having two more nimble segments will promote greater customer
intimacy and responsiveness," Mr. Cote said.
Home and building technologies, which had an estimated $9.4
billion in revenue in 2015, will include products that monitor and
control homes and buildings, such as security, fire and air
conditioning systems. It will be led by Terrence Hahn, who
previously ran Honeywell's transportation systems unit.
Safety and productivity solutions, which had an estimated $4.7
billion in revenue in 2015, provides products for workers such as
rugged mobile computers, bar-code scanners, gas sensing
technologies and personal protection equipment. It will be lead by
John Waldron, who had been the president of the sensing and
productivity solutions business unit.
The CEO of the automation and control solutions segment, Alex
Ismail, will leave the company. Honeywell will begin reporting
under the new segments next quarter.
In its automation and control-systems business, Honeywell saw an
acquisition-driven 9.4% jump in revenue to $3.89 billion. Core
organic sales decreased 1% because of lower volume in sensing and
solutions due to a large rollout last year, which was partially
offset by growth in security and fire.
In its performance materials and technologies unit, sales fell
2.9% to $2.33 billion. Core organic sales declined 4%. Lower gas
processing, licensing and equipment sales along with lower market
pricing in resins and chemicals contributed to the decline.
Revenue in the company's aerospace segment fell 1.3% to $3.78
billion on higher repair and overhaul activities and new platform
launches. Core organic sales dropped 2% on program delays in the
international, U.S. and service businesses within defense and
space, on lower shipments to business and general aviation
customers and on higher incentives for original equipment
manufacturers.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
July 22, 2016 07:54 ET (11:54 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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