Honeywell profit beats; forecasts strong full-year earnings

By Divya R and Ankit Ajmera

(Reuters) - Honeywell International Inc on Friday reported a better-than-expected quarterly profit and forecast full-year earnings in a range that was largely above analysts' estimates, as the company benefited from robust demand for aircraft parts.

The company, which spun off its home and transportation businesses in the fourth quarter of last year, is in a better position to focus on its more profitable businesses, including aerospace, as record orders for jets boosted demand for aircraft parts.

Honeywell has also taken advantage of a boom in e-commerce as it sees rising sales of its warehouse automation equipment and software to customers such as Amazon.com Inc.

 

"We now have a simpler, more focused portfolio ... with about 60 percent of the portfolio growing sales at or above 5 percent organically," Chief Executive Officer Darius Adamczyk said.

The company expects 2019 earnings per share between $7.80 and $8.10, compared to estimates of $7.88 per share, according to IBES data from Refinitiv.

Honeywell shares were up 1.5 percent at $145.83 before the bell.

However, its forecast for full-year sales of between $36 billion and $36.9 billion was below Wall Street expectations of $37.04 billion.

"As usual, we believe that Honeywell is sticking with its historical DNA to 'under-promise, over-deliver' and would expect that the ranges have a sufficient level of conservatism baked in," RBC Capital Markets analyst Deane Dray said, adding that investors were looking forward to an update on possible acquisitions Honeywell could make this year.

Analysts have said 2019 could be a year for some big acquisitions and share buybacks for Honeywell, as the company deploys billions of dollars of repatriated cash, which was held overseas.

The company said last year it would bring back at least $7 billion of the $10 billion in cash held overseas by end of 2019.

Excluding currency impacts, aerospace business sales rose 10 percent. Sales in the safety and productivity unit, which houses Honeywell's warehouse automation business, grew 15 percent.

Net income attributable to Honeywell was $1.72 billion, or $2.31 per share, in the fourth quarter ended Dec. 31, compared to a loss of $2.52 billion, or $3.32 per share, a year earlier.

The year-ago quarter included a charge related to the U.S. tax reform.

Excluding items, the company earned $1.91 per share, above estimates of $1.89 per share.

Net sales fell 10.3 percent to $9.73 billion, as Honeywell spun off its home and transportation businesses.

(Reporting by Divya R and Ankit Ajmera in Bengaluru; Editing by Shounak Dasgupta)