Honeywell Sees Stronger Sales in Third-Quarter 2010, Beating Expectations

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Researched by Industrial Info Resources (Sugar Land, Texas)--Leading diversified technology company Honeywell International (NYSE:HON) (Morris Township, New Jersey) saw generally positive results in the third quarter of 2010 as revenues and earnings increased in all four of the company's major segments. Although higher product- and service-related expenses ate away at earnings, overall results still exceeded expectations. Net income was reported to be $499 million, a 17.93% decrease from third-quarter 2009.

However, net sales stood at $8.39 billion, an 8.99% increase. Most of the decline in net income can be attributed to slight increases in the costs and expenses of products and services sold, as well as selling, general and administrative expenses, which were up 11.37% from third-quarter 2009.

Honeywell Chairman and CEO Dave Cote attributed the stronger revenues to continued growth in short-cycle businesses, such as general industrial products, and a recovering transportation market. The Transportation Systems segment saw the biggest jump in sales, largely due to the demand for turbochargers.

"Despite the economic landscape, we see a continued upward trend in our order rates across all segments, demonstrating our robust focus on new products and services, our great positions in good industries, and investments in global expansion," Cote said in a conference call. "While we've seen the biggest improvements in our early-cycle businesses, namely turbo and industrial businesses, we're not seeing an uptick in aerospace's commercial aftermarket."

Of the four major Honeywell segments, Transportation Systems saw the biggest gains in revenues and profits when compared with third-quarter 2009, while Aerospace saw the smallest. However, the gains in Aerospace represent a reversal from the first two quarters, when numbers were down from the first half of 2009:

• The Aerospace segment reported net sales of $2.7 billion, a 3.13% increase from third-quarter 2009, and profits of $458 million, a 0.66% increase.
• The Automation and Control Solutions segment reported net sales of $3.47 billion, an 8.97% increase from the same period last year, and profits of $471 million, a 9.28% increase.
• The Specialty Materials segment reported net sales of $1.18 billion, a 15.76% increase from third-quarter 2009, and profits of $194 million, a 25.16% increase.
• The Transportation Systems segment reported net sales of $1.04 billion, an 18.74% increase from the same period last year, and profits of $122 million, compared with only $62 million in third-quarter 2009.

For full-year 2010, Honeywell expects sales of about $33 billion, which is above the high end of the guidance range for second-quarter 2010. Cote said the company is well-positioned for 2011, when it expects to continue seeing benefits from focused seed-planting initiatives, key processing initiatives, and investments in research, development and new technologies.

"Given the strength of our year-to-date financial performance and continued strong momentum, we are raising our full-year guidance," Cote said in the conference call. He later said that the company plans to add approximately 50 new sites next year.

Among Honeywell's largest active U.S. projects is a $54.6 million plant in Metropolis, Illinois. With partial funding of $27.3 million from the U.S. Department of Energy, the company will construct a plant to produce 1,500 metric tons per year of high-purity lithium hexafluorophosphate for use in the high-quality lithium-ion batteries needed for electric vehicles, using technology developed by Honeywell. For more information, visit Industrial Info's North American Industrial Manufacturing Project Database.

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