Honeywell Forecasts 4-6% Sales Growth in 2016, Continued Oil & Gas Difficulties

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Researched by Industrial Info Resources (Sugar Land, Texas)--Executives with diversified technology company Honeywell (NYSE:HON) (Morris Plains, New Jersey) say they expect to see sales growth of 4-6% in 2016, despite continued strong headwinds from the Oil & Gas Production sector.

Industrial Info is tracking 10 active oil & gas projects worth $24.54 billion that include Honeywell products and technology. Roughly $20 billion is tied to ConocoPhillips' (NYSE:COP) (Houston, Texas) liquefied natural gas (LNG) production and export plant project in Quintana, Texas. The first production train, scheduled for completion in third-quarter 2018, would produce 4.4 million tons per year of LNG. Subsequent production trains would produce an additional 13.8 million tons per year.

Honeywell Chief Financial Officer Tom Szlosek said oil & gas-related products and technologies make up 11% of Honeywell's portfolio. Looking to 2016, he said he expects the oil & gas "environment to remain difficult, with project delays, lower oil and gas rig counts, and, as we have again experienced in the last few weeks, lower and more volatile oil prices."

For most of 2015, equipment orders logged by Honeywell's by UOP refining and chemical processing technology business were down from the previous year, particularly in its U.S. Midstream Gas Processing segment as well as refining and petrochemicals segments, Szlozek said.

On the other hand, orders for and sales of catalyst products were robust throughout the year, and there was a fourth-quarter uptick in licensing and equipment orders. UOP sales growth for 2016 will be confined to the "mid-low single digits on a core organic basis," Szlosek said.

Szlosek said Honeywell's chemicals businesses will see improved volumes and better plant performance in 2016. Industrial Info is tracking 51 active projects worth $556.39 million that directly belong to Honeywell, with all but $2 million of that tied to the Chemical Processing Industry.

Honeywell's $300 million refrigerants production unit addition at its facility in Carville, Louisiana is expected to reach completion in second-quarter 2017. The unit will produce refrigerant for automobiles.

Total capital expenditures by Honeywell are expected to remain flat in 2016 at about $1 billion.

Honeywell forecast sales in 2016 to run between $39.9 billion and $40.9 billion. This includes sales of $9.3 billion to $9.5 billion by its Performance Materials Technology business segment.

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