Honeywell Beats Profit Estimates on Higher Energy Sales

Honeywell International Inc. (HON), 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 13 percent to $1.24 per share from $1.10, a year earlier. 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 8.4 percent to $10.4 billion, topping analysts’ average predictions of $10.2 billion. Revenue was led by a 12 percent increase at the performance materials unit to $1.73 billion and a 16 percent gain for turbochargers to $978 million.

Aerospace sales rose 2.6 percent to $3.1 billion, helped by a $63 million one-time royalty payment, the company said. Sales at Automation and Control Solutions rose 9.7 percent to $4.58 billion as a residential housing rebound drove sales for safety and security products.

Shares rise

The shares fell 1.5 percent to $88.47 at the close in New York. They have fallen 3.2 percent this year compared with a 3.1 percent drop in the Standard & Poor’s 500 Index.

Honeywell is predicting sales this quarter of $9.6 billion to $9.8 billion, which is below analysts’ estimates of $9.87 billion. Sales growth excluding acquisitions will be 2 percent to 4 percent, Honeywell said. That’s lower than organic sales growth of 5 percent in the fourth quarter.

The company reported net income excluding changes to the company’s pension-fund valuation rose 13 percent to $985 million, or $1.24 per share, from $873 million, 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.

Long Term

“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 today said it sold 2.6 million shares of B/E Aerospace Inc. 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 Jan.7, Honeywell announced that it reached an agreement to sell its brake-pads business for $155 million and would record an after-tax fourth-quarter loss of about 4 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 U.S. emissions rules. Turbochargers let manufacturers build smaller and lighter engines while maintaining -- or increasing -- horsepower.

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.