Honeywell Sales Beat Estimates Amid Energy Expansion

Honeywell International Inc. (HON) posted higher fourth-quarter sales than analysts estimated after acquiring a natural-gas processing company and increasing revenue from automation and control products.

Sales of $9.58 billion compared with the $9.5 billion average from analysts surveyed by Bloomberg. Profit before pension expense rose to $1.10 a share from $1.05 a year earlier, the Morris Township, New Jersey-based company said in a statement. That matched analysts’ projections.

An increase in energy industry investment has fueled sales at Honeywell’s performance-materials unit, helping make up for weaker defense orders for aerospace parts and lower European demand for auto turbochargers.

“This was a typical Honeywell quarter -- solid execution, no surprises,” Robert Stallard, a London-based analyst at RBC Capital Markets, wrote in a note today. Stallard has an outperform rating on the stock.

Sales were buoyed by the $525 million purchase of a 70 percent stake in Thomas Russell Co., which makes equipment to remove contaminants from natural gas. The acquisition was completed on Oct. 22.

Including a pension expense to write down the value of investments to market prices, the company posted net income of $251 million, or 32 cents a share, compared with a loss of $310 million, or 40 cents, a year earlier. Honeywell reiterated its 2013 earnings forecast of $4.75 to $4.95 a share.

The company’s stock rose 0.1 percent to $68.33 at the close in New York. Honeywell has gained 7.7 percent this year, outperforming the 5.4 percent increase in the Standard & Poor’s 500 Index.

Segment Profits

Profit from the company’s business units rose 4.7 percent to $1.5 billion, and the segment margin expanded 50 basis points to 15.6 percent.

Earnings were driven by the Automation and Control Solutions unit, which posted a 10 percent gain to $645 million. Performance Materials saw profit drop 5.8 percent to $210 million because of lower catalyst sales and higher raw-material costs.

For 2012, Honeywell posted adjusted earnings per share of $4.48 and sales of $37.7 billion, both in line with its October forecast. The annual segment profit margin rose 90 basis points from a year earlier to 15.6 percent, just shy of Honeywell’s goal of 16 percent to 18 percent in 2014.

For the first quarter, Honeywell expects sales of $9.3 billion to $9.5 billion and earnings per share of $1.10 to $1.15, according to a presentation on its website. Analysts project first-quarter earnings of $1.13 a share, the average of 14 estimates.

Transportation unit sales will be hurt in the first quarter by declining light-vehicle sales in Europe, and lower defense spending on aerospace will continue, Honeywell said in the presentation.

The performance materials unit will post sales gains of as much as 9 percent on the Thomas Russell acquisition and higher deliveries from the fuels-processing equipment business.

To contact the reporter on this story: Thomas Black in Dallas at tblack@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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