Honeywell Sees U.S. Growth Below Estimates, CFO Says
Honeywell International Inc. (HON), the maker of products from thermostats to cockpit controls, predicts the U.S. will grow at a slower pace this year than economists estimate as Congress continues to grapple over spending.
Honeywell forecasts the U.S. economy will expand 1.7 percent, Chief Financial Officer David Anderson said in a telephone interview today. That’s lower than the 2 percent average of 83 economists’ estimates compiled by Bloomberg. The Morris Township, New Jersey-based company also sees the euro region contracting as much as 0.3 percent this year, more than the predicted 0.1 percent decline.
Chief Executive Officer David Cote -- whose company gets $37.7 billion in annual sales from customers ranging from Boeing Co. (BA) to chemical producer Dow Chemical Co. -- has warned of government debt burdens worldwide. Cote, a steering committee member for the Campaign to Fix the Debt and an appointee to President Barack Obama’s 2010 fiscal commission, has prodded U.S. lawmakers to resolve a standoff over deficit spending with a mix of tax increases and cuts.
“Big democracies around the world are still in gridlock over debt,” Cote said on a conference call today with analysts. “The U.S. is kicking the debt can down the road and finding that kick doesn’t quite go as far as it used to.”
The lower house of Congress approved legislation on Jan. 23 to suspend the limit on federal borrowing until the middle of May. The bill on the so-called debt ceiling now goes to the Senate. The Congress faces a March deadline for $1.2 trillion of automatic spending cuts.
Honeywell is less pessimistic about China, where the company predicts the economy will grow about 8 percent. That’s in line with the average estimate of 8.1 percent. China’s economy slowed to a 7.8 percent expansion last year from 9.3 percent in 2011 and 14 percent in 2007.
“China has clearly averted a hard landing and today it’s becoming a slight tailwind,” Anderson said. “We’re seeing slight improvement in a number of our end markets.”
Honeywell expects its sales growth in China will outpace the economy as a whole and end 2013 at about 11 percent to 12 percent, Anderson said.
A sluggish global economy that’s expected to grow at about 2.5 percent this year will keep Honeywell’s sales from existing businesses in check, with an increase of about 1 percent to 3 percent, the executive said. The company’s net income will rise 7 percent to 12 percent this year, helped by increased market share and cost cuts and improved efficiency, Anderson said.
“We’re going to grow faster than most of the markets we serve and we have the benefit of a number of operating disciplines,” he said.
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