How Honeywell International Inc. (NYSE:HON)’s Q4 Sales Missed Estimates?

How Honeywell International Inc. (NYSE:HON)’s Q4 Sales Missed Estimates?


Investors reacted mutedly to Honeywell International Inc. (NYSE:HON)’s earnings and revenue performance in the fourth quarter. The stock traded down in the pre-market trading on Friday as the top line fell short of expectations.

Honeywell International indicated that its sales from Aerospace division recorded 5 percent fall on a core organic basis. The company blamed it on lower volumes in Business and General Aviation apart from increased OEM incentives. This apart, weakness was seen in the United States space and global defense in the commercial helicopter business.

Though this was compensated by global gas turbo penetration in passenger vehicles in Transportation systems, it was not enough to offset other weakness completely. The company’s division also faced margin pressures as it ceded 1.3 percentage points to 20.2 percent citing incentives, product mix and lower volumes. Excluding incentives, margin from the segment would have fallen ten basis points.

Honeywell’s Home and Building technologies witnessed two percent sales growth on a core organic basis fueled by strength in Building Solutions and Distribution business and double-digit growth in China and India. However, its margin dipped 30 basis points to 16.8 percent.

Similarly, the company’s Performance Materials and Technologies recorded sales uptick of 5 percent driven by robust catalyst, equipment growth in UOP and licensing. Its margin expanded 5.2 percentage points to 25.4 percent fueled by productivity net of inflation and commercial excellence apart from catalyst volumes.

Honewell’s Safety and Productivity solutions is another segment that witnessed 6 percent drop in sales. Its margin also fell one percentage point to 14.3 percent due to acquisition amortization and integration costs. On an adjusted basis, its margin would have expanded by one percentage point.

Commenting on the results, the company’s chairman and CEO, Dave Cote, said: “To better drive top-line growth and improve our overall decision-making speed, we realigned our business segments and funded more than $250 million in internal restructuring projects. In addition, our debt refinancing will reduce our expected 2017 interest expense by about 8% despite increasing total borrowings by $4 billion, and we returned nearly $4.5 billion to our shareowners through dividends and share repurchases.”

At last check, the stock fell 0.65 percent in the pre-market trading.