Honeywell beats profit estimates, raises full-year forecasts

[BENGALURU] Honeywell International Inc reported a better-than-expected quarterly profit, as sales in its aerospace unit and the business that caters to the energy industry were not as bad as it had feared.

Sales in Honeywell's aerospace business, its biggest, fell about three per cent to US$3.67 billion in the second quarter ended June 30, smaller than the company's forecast of a decline of 5 to 7 per cent.

Margins in the unit rose to 22.3 per cent from 20.9 per cent, Honeywell, which makes products ranging from aircraft engines to handheld barcode scanners, said.

The unit, which makes jet engines and provides spare parts, repair, overhaul and maintenance services, benefited from strength in its commercial aviation after-sales business and growth in US defence volumes, Honeywell said.

Honeywell is reviewing whether to separate its aerospace business, a move hedge fund Third Point LLC wants the US industrial conglomerate to pursue.

Third Point, run by billionaire Dan Loeb, in April said the spin off of the aerospace business could create more than US$20 billion in shareholder value.

Sales in Honeywell's performance materials and technologies unit, which makes catalysts and adsorbents used for petroleum refining, dropped about 8 per cent to US$2.24 billion in the quarter. Honeywell had forecast a decline of 10 per cent to 12 per cent.

The business benefited from higher sales of Honeywell's Solstice low global-warming potential refrigerant products, the company said. Margins in the business rose to 23.4 per cent from 21.4 per cent.

Honeywell also raised the low end of its full-year earnings per share forecast range by 10 US cents to US$7.00. The company kept the high end of the range unchanged at US$7.10.

Honeywell said it now expects 2017 sales in the range of US$39.3 billion to US$40 billion, compared with its previous forecast of US$38.6 billion to US$39.5 billion.

Analysts on average were expecting 2017 earnings of US$7.09 per share on revenue US$39.43 billion, according to Thomson Reuters.

"We expect continued momentum in organic sales growth throughout 2017, supported by strong order rates and a growing backlog across many of our businesses," chief executive Darius Adamczyk said in a statement.

Net income attributable to Honeywell increased 5.5 per cent to US$1.39 billion, or US$1.80 per share, in the second quarter.

The company's revenue rose about one per cent to US$10.08 billion.

Analysts on average had expected second-quarter earnings of US$1.78 per share, and revenue of US$9.89 billion.

Shares of Honeywell were marginally down at US$134.78 in premarket trading on Friday.

REUTERS