Honeywell Sales Jump Most Since 2014, Buoying CEO’s Spinoff Plan

Oct 23, 2017

CEO Darius Adamczyk: “Honeywell is well positioned in both the short and long term, and we anticipate a strong finish to 2017.”

Honeywell International Inc. posted expanded profit margins and the biggest sales gain in three years as new CEO Darius Adamczyk prepares to shed two businesses.

Sales from existing operations rose 5% in the third quarter — accelerating a turnaround from 2016 declines — thanks to increases at the aerospace and energy units. That’s the biggest improvement for the maker of cockpit controls and warehouse automation equipment since a similar increase in the third quarter 2014.

Adjusted earnings per share was $1.75, Honeywell said in a statement, up from $1.60 a year earlier and matching a preliminary figure Adamczyk provided 10 days ago when he announced a move to spin off the company’s automotive and home-products units. Overall revenue, which includes impacts from divestitures and currency fluctuations, rose 3.2% to $10.1 billion.

Cost cutting helped boost third-quarter profit margins from the business segments by 1.2 percentage points from a year earlier to 18.7%.

“Honeywell is well positioned in both the short and long term, and we anticipate a strong finish to 2017,” the CEO said.

The company, based in Morris Plains, New Jersey, forecasts fourth-quarter earnings per share of $1.79 to $1.84. The average of 11 analysts’ estimates compiled by Bloomberg predicts $1.84. Revenue is expected to increase as much as 7%, with sales excluding acquisitions and currency expanding as much as 6%.

The company reiterated a full-year target for adjusted earnings per share of $7.05 to $7.10 and said sales will be as much as $40.4 billion.

Adamczyk, who became CEO at the end of March and will become chairman in April, decided to shrink Honeywell to boost profit margins and sales growth. The two units earmarked for spinoff next year have combined annual sales of $7.5 billion.

The onus now falls on Adamczyk to speed the pace of acquiring companies in a market that he described as “a little frothy” in an Oct. 10 interview. Honeywell in the last two years has announced only one acquisition of more than $1 billion.

Honeywell rose 0.7% to $144.69 at 7:03 a.m. before regular trading begins in New York.

By Thomas Black

Source: IndustryWeek