Honeywell Holds Steady Amid Tough Markets in Third-Quarter 2012, Expects to See More in Last Quarter of Year

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Leading diversified technology company Honeywell International (NYSE:HON) (Morris Township, New Jersey) saw mixed but mostly positive results in the third quarter of 2012. A strong Aerospace segment and ongoing expansion in high-growth regions managed to offset most of the negative effects from the chaotic European markets and weakened demand in the U.S. and China for some of the company's products. Net income for the quarter was reported to be $950 million, a 10.21% increase from third-quarter 2011.

Net sales stood at $9.34 billion, a 0.5% increase from the same period last year. Honeywell executives highlighted the Aerospace segment, in which commercial original equipment sales improved dramatically as big-name customers increased production. The Performance Materials and Technologies segment was boosted by increased licensing and equipment sales, as well as newly introduced specialty and electronic products. However, a weakened automotive market in Europe and the effects of foreign exchange dragged down the Transportation Systems sector.

Industrial Info is tracking more than $4.3 billion in active projects involving Honeywell, including a $20 million expansion at an adsorbents and catalysts plant owned by subsidiary UOP LLC in Chickasaw, Alabama. The project involves increasing production capacity by 50% for the production of IONSIV Ion Exchanger crystalline radiation adsorbents, as well as increasing capacity for the production of Honeywell UOP ADS-47 Parex adsorbents, which are used to raise the paraxylene yield in petrochemical processing. The project is expected to be completed in December this year.

Honeywell also is increasing capacity at its own Chesterfield Organic Fibers plant in Chester, Virginia. The $15 million plan involves adding polyethylene fiber line equipment and supporting equipment to handle increased production volume for the "Superstring Project." The project also is expected to be completed in December this year.

"Overall, we saw a deceleration in growth rate in nearly every region in the quarter," said David Anderson, the senior vice president and chief financial officer of Honeywell, in a conference call. "However, we're continuing to benefit from the strength of our long-cycle businesses; namely, commercial aerospace, the [Automation and Control Solutions segment] businesses, and also UOP."

As with last quarter, Transportation Systems was the only of the four major Honeywell segments to report smaller revenues or profits when compared with the same period last year:

• The Aerospace segment reported net sales of $3.04 billion, a 4.14% increase from third-quarter 2011, and profits of $582 million, a 24.61% increase.
• The Automation and Control Solutions segment reported net sales of $3.96 billion, basically unchanged from the same period last year, and profits of $571 million, a 4.96% increase.
• The Performance Materials and Technologies segment reported net sales of $1.48 billion, basically unchanged from third-quarter 2011, and profits of $275 million, an 8.27% increase.
• The Transportation Systems segment reported net sales of $863 million, a 10.1% decrease from the same period last year, and profits of $104 million, a 14.05% decrease.

Sales for the fourth quarter of 2012 are expected to be between $9.4 billion and $9.6 billion. Honeywell executives say the company is planning for slower growth in fiscal year 2013, but expect to continue to expand geographically and to benefit from new products. In particular, a continuing growth in infrastructure spending and oil and gas investments are expected to benefit Honeywell, and the Aerospace segment is expected to see more success.

"[For] 2013, the clarity on the macro side is still murky," said Dave Cote, the chairman and chief executive officer of Honeywell, in the conference call. "There's nothing out there to suggest anything but continued conservative planning is best, and we're expecting another year of strong margin expansion in a slow-growth environment."

For more information, visit Industrial Info's North American Industrial Manufacturing Project Database.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, 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.