Honeywell Expects Strong Growth from Aerospace, Performance Materials in 2015 as Backlog Grows

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Executives at leading diversified technology company Honeywell International (NYSE:HON) (Morris Township, New Jersey) said in a conference call that the company expects to see strong growth over the next year, as it continues to invest in its Aerospace and Performance Materials & Technologies segments. Executives said that Honeywell is looking at a strong momentum in long-cycle orders and backlog for 2015.

Industrial Info is tracking $7.66 billion in active projects involving Honeywell, with slightly more than $6 billion attributed to the massive Australia Pacific Liquefied Natural Gas (APLNG) plant project near Gladstone, Queensland, on Curtis Island. The project is jointly operated by ConocoPhillips (NYSE:COP) (Houston, Texas) for downstream works, and Origin Energy Limited (ASX:ORG) (Sydney, New South Wales) for upstream works. Honeywell is serving as a technology provider. For more information, see November 19, 2014, article - Monadelphous Monopolizes Major Maintenance Contracts Across Australia; and July 28, 2014, article- Massive LNG Projects in Australia Reach Significant Milestones.

Almost all of the remaining projects are in the Chemicals Processing Industry, including the $451 million cleanup of the heavily polluted Onondaga Lake, near Syracuse, New York. Honeywell is working with Parsons Corporation (Pasadena, California), O'Brien & Gere Engineers (Syracuse, New York) and Sevenson Environmental Services Incorporated (Niagara Falls, New York) to treat about 3 billion gallons of water, dredge about 2 million cubic yards of soil from the lake, and cap about 2.8 million cubic yards of material in order to remove chemicals from a former production plant. Completion is expected by September 2017.

On a more positive note for the company, it is currently expanding the capacity of subsidiary UOP LLC's catalyst plant in Shreveport, Louisiana. The $250 million first phase of the project involves installing two new production lines. A $100 million second phase, expected to begin early next year, is expected to add another line.

The company narrowly reduced its sales outlook for full-year by about $200 million, to between $40.2 billion and $40.1 billion. Much of the difference comes from the cost of original-equipment manufacturer (OEM) incentives, which was a result of key contract wins for mechanical and avionics products. However, Honeywell executives revised guidance for 2015 upward to between $40.5 billion and $41.1 billion, from a previous estimate of between $40.1 billion and $40.2 billion.

"2015 is poised to be another terrific year for Honeywell," said Tom Szlosek, senior vice president and chief financial officer of Honeywell, in a conference call. "We have, and will continue, to invest in [research & development] and sales & marketing sources globally. This focus on innovation has enabled big wins in the marketplace ... Our penetration in high-growth regions is relentless, and we continue to drive [capital spending] investments in high-[return on investment] projects, particularly in Performance Materials & Technologies."

Szlosek also said that the company was investing in capital expenditures at a rate of about 1.5 to double that of depreciation, "a trend that we expect to continue into 2015."

Sales outside the U.S. are expected to account for about 55% of Honeywell's sales.

"In the U.S., we're planning for continued modest improvements in organic sales growth," Szlosek said. "The short-cycled businesses are expected to continue to see low- to mid-single-digit organic growth, consistent with the order rates that we've seen as we exit 2014. And although it is stabilizing, our U.S. defense and space business will continue to be a slight headwind in growth in 2015. We expect to see continued declines in the DNS products businesses in the U.S., partly offset by solid growth in our U.S. services businesses, which have been down by double-digits in each of the last two years."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.