Honeywell Weathers Tough Global Economy to Post Solid Gains in Second-Quarter 2012 as Volumes Improve

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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 solid companywide results in the second quarter of 2012, including volume growth in most businesses and a strong U.S. performance in the Automation and Control Solutions segment. Net income was reported to be $902 million, an 11.36% increase from second-quarter 2011.

Total net sales stood at $9.44 billion, a 3.84% increase from the same period last year. The Aerospace segment benefited from an 18% increase in its commercial end markets, with significant growth in repair and overhaul sales. The Automation and Control Solutions segment was boosted by improved productivity and the favorable impact of recent acquisitions, while the Performance Materials and Technologies segment benefited from strong licensing, equipment and service sales, as well as strong volumes in its resins and chemicals business. The Transportation Systems segment, however, was affected negatively by weakened light vehicle production volumes in Europe and unfavorable foreign exchange rates, although the segment did see stronger results for turbo gas in North America.

Industrial Info is tracking $639 million in active projects involving Honeywell, including $20 million in utility and infrastructure upgrades at the Baton Rouge South Works plant in Baton Rouge, Louisiana. The project involves upgrading and replacing steam and water pipes, and repairing aging plant components, including electrical equipment and controls in the utilities area. The project is expected to be completed in June 2013.

Honeywell is also planning to expand its plant in Hopewell, Virginia, for about $300 million. If the project is performed, each production unit in the plant would be expanded, including the ammonia, ammonium sulfate, specialty chemicals, sulfuric acid, caprolactum and cyclohexane units, through the installation of process and supporting equipment to increase plant capacity. The project is currently expected to kick off in March 2013 and be completed in September 2014.

"As expected, our short-cycle businesses posted slower growth this quarter, with declines in Europe and slower growth in China," said Dave Cote, the chairman and chief executive officer of Honeywell, in a conference call. "However, our long-cycle businesses--namely Commercial Aerospace and UOP--continued with strong performance." UOP LLC is a subsidiary of Honeywell that develops technology for the petroleum refining, gas processing, petrochemical and major manufacturing industries.

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

• The Aerospace segment reported net sales of $3.03 billion, a 7.72% increase from second-quarter 2011, and profits of $562 million, a 24.61% increase.
• The Automation and Control Solutions segment reported net sales of $3.96 billion, a 2.11% increase from the same period last year, and profits of $525 million, a 5.85% increase.
• The Performance Materials and Technologies segment reported net sales of $1.55 billion, a 9.96% increase from second-quarter 2011, and profits of $350 million, a 24.56% increase.
• The Transportation Systems segment reported net sales of $900 million, a 10% decrease from the same period last year, and profits of $114 million, an 11.63% decrease.

Cote said that, despite an uncertain global economic outlook, Honeywell expects to see positive results for the remainder of the year and in 2013, although Europe is expected to continue to show weakness in the Automation and Control Solutions and Transportation Systems segments.

"The Americas [businesses] are holding up well, and the indicators we're tracking are still positive," Cote said in the conference call. "The same is true in China, with a modest uptick in our short-cycle businesses, helping to drive double-digit growth again in the quarter."

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.