Despite macroeconomic headwinds,
Honeywell International Inc.
) reported solid first quarter 2013 results with earnings of $966
million or $1.21 per share compared to $825 million or $1.04 in
the year-ago quarter, representing a growth of 16% on a per share
basis. The earnings for the reported quarter comprehensively beat
the Zacks Consensus Estimate by 7 cents.
Total revenue for first quarter 2013 was comparatively flat
year over year at $9.3 billion due to the continued macroeconomic
challenges, Total revenues failed to beat the Zacks Consensus
Estimate of $9.4 billion. Almost all the segments, except
Performance Materials and Technologies segment reported a decline
Operating margins expanded 120 bps year over year.
Honeywell continued to benefit from investments in new
products and services like turbo gas launches in North America
and China. Also, the optimum mix of long- and short-cycle
businesses was the key driver for the growth.
segment sales dipped 1% year over year to $2.91 billion,
primarily due to a decline in the Commercial, Defense and Space
business. However, segment profit increased 3% year over year to
$551 million on the back of commercial excellence and superior
productivity net of inflation, partially offset by lower
Margins in this segment came in at 18.9%, up 80 bps from year
Automation and Control Solutions
segment sales were flat year over year at $3.79 billion in the
reported quarter, as the rise in Energy, Safety, Security
business was partially offset by lower sales in Process Solutions
and Business Solutions. However, segment profit surged 7% to $523
million on the back of commercial excellence and superior
productivity net of inflation. Margins for this segment also
expanded 80bps year-over-year and was reported at 21.8%.
segment revenue of $914 million for the quarter declined 4% year
over year due to 10% lower European light vehicle production and
aftermarket sales volume, partially offset by rise in sales from
new platform launches, like turbo gas launches in North America
In addition, segment profit plummeted 8% year over year to
$111 million, primarily driven by lower sales volumes and the
expenses related to continuing projects to improve operational
efficiency in the Friction Materials business, partially offset
by production benefits. Margins for this segment came in at
12.1%, down 50bps year over year.
Performance Materials and Technologies
segment sales increased 6% during the quarter to $1.7 billion due
to the acquisition of Thomas Russell, higher petrochemical
catalyst shipments and higher equipment sales in UOP, partially
offset by premeditated plant outages in Resins & Chemical and
Segment profit increased by a healthy 17% to $374 million, due
to higher revenue at UOP and favorable price net of inflation,
partially offset by lower volume in Advanced Materials. Margins
in the segment expanded 200 bps year over year.
Cash and cash equivalents at quarter-end was $4.54 billion.
Long-term debt till the first quarter of 2013 was reported at
Cash flow from operating activities improved significantly to
$341 million compared with $196 million in the year-ago
With strong growth in the first quarter earnings, Honeywell
has revised the low-end of earnings guidance for full year 2013
by five cents from $4.75-$4.95 per share to $4.80 to
$4.95.However, it has revised it sales guidance for the full-year
downwards to $38.8 - $39.3 billion compared with the prior
guidance of $39.0 - $39.5 billion.
We remain encouraged by management's continued effort to
launch new products and technologies and expand its business in
new geographical regions. Honeywell currently has a Zacks Rank #2
Some of the other stocks worth looking at within the sector
China Merchants Holdings
), with a Zacks Rank #1(Strong Buy),
Carlisle Companies Inc.
), carrying a Zacks Rank #2 (Buy) each.
CHINA MERCHANTS (CMHHY): Get Free Report
CRANE CO (CR): Free Stock Analysis Report
CARLISLE COS IN (CSL): Free Stock Analysis
HONEYWELL INTL (HON): Free Stock Analysis
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