Honeywell Boosts Low End of 2015 Forecast as Profit Rises

Honeywell International Inc. raised the low end of its 2015 profit forecast and posted quarterly earnings that beat analysts’ estimates, buoyed by demand for business-jet engines and building-control systems.

The revision is Honeywell’s second this year, making the company an outlier in the Standard & Poor’s 500 Industrials Index. Chief Executive Officer Dave Cote has cut costs, added new products and is benefiting from rising U.S. economic growth that’s helping boost profit even as an oil-drilling slump and strong dollar crimp sales.

“Looking out in the second half of the year they’re pretty sure they have their ducks in the row in terms of profit margin expansion, particularly on the aerospace side,” said Charlie Smith, chief investment officer at Fort Pitt Capital Group Inc., which oversees $1.8 billion and owns about $30 million of Honeywell shares.

Honeywell rose 1.9 percent to $105.54 at the close in New York. That pushed the stock’s gain to 5.6 percent this year, topping the 3.3 percent increase in the S&P 500 Index.

Full-year earnings per share will be $6.05 to $6.15, up from a previous range starting at $6, Honeywell said.

Quarterly profit excluding pension expense rose to $1.51 a share from $1.38 a year earlier, Honeywell said in a statement. That exceeded the $1.49 average of 18 analysts surveyed by Bloomberg.

Revenue Drops

Revenue fell 4.7 percent to $9.78 billion, beating the average $9.74 billion estimate in the analyst survey. Excluding the impact from foreign currency and divestitures, sales rose 3 percent, Honeywell said. The Morris Township, New Jersey-based company reiterated its 2015 sales forecast of $39 billion to $39.6 billion.

The Automation and Control Solutions unit, whose products include fire-safety and security systems, posted profit of $567 million, a 6.4 percent gain. At the Aerospace unit, which makes jet engines and cockpit controls, operating profit rose 2.4 percent to $777 million.

Profit at the Performance Materials and Technologies unit rose 7.2 percent to $509 million. That unit is a supplier to the energy industry, making chemicals such as refrigerants and selling gas filtering equipment and catalysts that improve refining output.

For the current quarter, Honeywell forecast earnings per share of $1.51 to $1.56, while analysts had predicted $1.57. Sales from existing businesses and excluding foreign-currency impacts will rise 3 percent to 4 percent from a year earlier, the company said in a slide presentation.

“We expect that the sales acceleration we enjoyed this quarter will continue into the second half of the year,” Cote said on a conference call.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE