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Honeywell beats estimates

By on January 27, 2014

Honeywell International Incorporated, whose product line spans aviation controls to solvents, posted a fourth-quarter profit that beat analysts’ estimates as sales of energy-related products and turbochargers increased.

Earnings excluding changes to the company’s pension-fund valuation climbed by 13 per cent to $1.24 per share from $1.10, a year earlier.

Bloomberg News reported on Friday, that analysts had projected adjusted earnings per share of $1.21.

Honeywell is benefiting from rising oil and gas investments worldwide that are driving demand for materials, equipment and services.

The Morris Township, New Jersey-based company makes membranes to filter natural gas and won contracts last quarter to upgrade petrochemical plants in China and a Swedish refinery.

“It looked like a pretty good quarter overall,” said Christian Mayes, an analyst with Edward Jones & Co. who has a buy rating on the stock. “On the transportation side, that was a nice stand-out with very strong growth.”

Sales rose by 8.4 per cent to $10.4bn, topping analysts’ average predictions of $10.2bn. Revenue was led by a 12 per cent increase at the performance materials unit to $1.73bn and a 16 per cent gain for turbochargers to $978m.

Aerospace sales rose by 2.6 per cent to $3.1bn, helped by a $63m one-time royalty payment, the company said.

Sales at Automation and Control Solutions rose by 9.7 per cent to $4.58bn as a residential housing rebound drove sales for safety and security products.

The shares rose by 1.1 per cent to $90.74 at 10:39 a.m. in early New York trading. They have fallen by 1.7 per cent so far this year, compared with a 1.1 per cent drop in the Standard & Poor’s 500 Index.

Honeywell is predicting sales this quarter of $9.6bn to $9.8bn, which is below analysts’ estimates of $9.87bn. Sales growth excluding acquisitions will be two per cent to four per cent, Honeywell said. That’s lower than organic sales growth of five per cent in the fourth quarter.

The company reported net income excluding changes to the company’s pension-fund valuation rose by 13 per cent to $985m, or $1.24 per share, from $873m or $1.10, a year earlier. Analysts had projected adjusted earnings per share of $1.21. The company reiterated its 2014 earnings per share target of $5.35 to $5.55.

“We have to keep looking at the long term,” Mayes said. “Yes, the first quarter might be a little bit tougher, but I think the growth picture remains intact.”

Honeywell said it sold 2.6 million shares of B/E Aerospace Incorporated that it owned, adding 16 cents to earnings per share in the quarter and making up for a similar amount of charges from the sale of its brake pad business, and environmental and restructuring costs.

On January7, Honeywell announced that it reached an agreement to sell its brake-pads business for $155m and would record an after-tax fourth-quarter loss of about four cents a share.

Divesting that division is part of Cote’s strategy to focus auto-related operations on turbochargers, which are finding increasing favor with carmakers to meet stricter US emissions rules. Turbochargers let manufacturers build smaller and lighter engines while maintaining — or increasing — horsepower.

 

 

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