Honeywell Rises Most Since July After Profit Forecast

Honeywell International Inc. (HON) rose the most in nine months after predicting second-quarter earnings will increase more than analysts estimated, as demand for energy services surges.

Honeywell, maker of cockpit controls and thermostats, said today that profit may increase to $1.18 to $1.23 a share, from $1.14 a year earlier. The top end surpasses the $1.21 average of estimates compiled by Bloomberg. The shares gained 3.8 percent to $74.18 at the New York close for the biggest gain since July 18.

A surge in U.S. natural gas production and in companies building petrochemical plants is driving demand for Honeywell’s energy services. That’s making up for a decline in the Morris Township, New Jersey manufacturer’s automobile turbocharger business, which depends on European demand for cars and trucks.

“Another solid quarter by Honeywell, reflecting the global balance of both short and long cycle business,” Peter Arment, an analyst with Sterne Agee & Leach Inc. in New York who recommends buying the stock, wrote in a note. “Despite macro headwinds, Honeywell’s guidance still demonstrates an out- performance versus peers.”

The stock has gained 17 percent this year, surpassing the 9 percent increase in the Standard & Poor’s 500 Index.

Photographer: Emile Wamsteker/Bloomberg

A pilot activates an infrared display in the cockpit of a Gulfstream jet during Honeywell International Inc.'s prototype infrared technology demonstration flight between Morristown, New Jersey, and Rutland, Vermont. Close

A pilot activates an infrared display in the cockpit of a Gulfstream jet during... Read More

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Photographer: Emile Wamsteker/Bloomberg

A pilot activates an infrared display in the cockpit of a Gulfstream jet during Honeywell International Inc.'s prototype infrared technology demonstration flight between Morristown, New Jersey, and Rutland, Vermont.

Honeywell, like other global industrial companies, is facing recessions in Europe and a sluggish U.S. economy. General Electric Co. today posted a decline in first-quarter sales at its Power & Water business, which curbed manufacturing growth.

Profit Outperforms

Honeywell’s profit is outperforming even as sales aren’t. The manufacturer raised the lower end of its 2013 earnings-per- share target by 5 cents to $4.80 and left the top end at $4.95. It lowered both ends of its annual sales forecast by $200 million, now predicting $38.8 billion to $39.3 billion.

Net income for the first quarter rose 17 percent to $966 million, or $1.21 a share, from $823 million, or $1.04, a year earlier. Analysts had predicted earnings per share of $1.14. Sales were little changed from a year earlier at $9.33 billion, shy of the $9.45 billion average prediction.

“Honeywell delivered better than expected quarterly earnings and margins even in a continued slow global growth environment,” Dave Cote, chairman and chief executive officer, said in a statement. “We had strong productivity in the quarter.”

Energy Businesses

Sales at the performance-materials and technologies unit, which contains the energy-related businesses, rose 6.3 percent to $1.72 billion and profit jumped 17 percent to $374 million. Revenue was little changed for the automation unit at $3.79 billion while profit rose 7 percent to $523 million.

The transportation unit, which sells turbochargers and auto brakes, saw revenue drop 4.2 percent to $914 million as profit declined 7.5 percent. Aerospace sales fell 1.3 percent to $2.91 billion while profit gained 3.2 percent.

Honeywell predicted second-quarter sales will be as much as $9.7 billion, a 2.8 percent gain from a year earlier with the energy-related unit driving the increase.

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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