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

To contact the editor responsible for this story: Ed Dufner at

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