Despite macroeconomic headwinds,
Honeywell International Inc.
) reported solid fourth quarter 2012 results with adjusted
earnings of $1.10 per share compared to $1.05 in the year-ago
quarter. The adjusted earnings for the reported quarter
marginally beat the Zacks Consensus Estimate by a penny.
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For full year 2012, the company reported adjusted earnings of
$4.48 per share compared to $4.05 in the previous year. The
adjusted earnings for the year were in sync with the Zacks
Total revenue for fourth quarter 2012 increased 1% year over year
to $9.6 billion, exceeding the Zacks Consensus Estimate of $9.5
billion. For full year 2012, sales increased 3% year over year to
$37.7 billion as Honeywell continued to benefit from investments
in new products and services. At the same time, the company
strengthened its key processes, namely Honeywell Operating
System, Velocity Product Development, and Functional
Transformation to fuel its growth engine. The optimum mix of
long- and short-cycle businesses and expansion in high-growth
regions also helped to offset lower demand in some of the
short-cycle businesses, foreign exchange headwinds, and continued
softness in European markets. The company currently has a strong
long-cycle order backlog of $15.8 billion.
segment sales dipped 1% year over year to $3.0 billion primarily
due to a 6% decline in Defense and Space business. However,
segment profit increased 5% year over year to $601 million on the
back of commercial excellence and superior productivity net of
Automation and Control Solutions
segment sales were $4.2 billion in the reported quarter,
representing a 3% year over year growth, mostly led by volume
increase and accretive acquisitions. Segment profit surged 10% to
$645 million on the back of commercial excellence and superior
productivity net of inflation.
segment revenue of $844 million for the quarter declined 11% year
over year due to lower European light vehicle production and
aftermarket sales volume. In addition, segment profit plummeted
20% year over year to $94 million primarily driven by lower sales
volumes and price and adverse foreign translation effects.
Performance Materials and Technologies
segment sales increased 8% during the quarter to $1.5 billion due
to accretive acquisition. However, segment profit decreased 6% to
$210 million due to unfavorable price spread in Resins and
Chemicals and continued challenging end-market conditions.
Cash and cash equivalents were $4.6 billion at year-end 2012
compared to $3.7 billion in the prior-year period. Long-term debt
improved marginally to $6.4 billion from $6.9 billion in 2011.
With strong quarterly and full year results, Honeywell has
reiterated its earnings and revenue guidance for full year 2013.
The company expects total revenue of $39.0 billion to $39.5
billion in 2013. Earnings are expected to be in the range of
$4.75 to $4.95 per share.
We remain encouraged by the steady performance of the company in
the quarter. However, Honeywell needs to be wary of tough
competition from its rivals such as
Johnson Controls Inc.
United Technologies Corp.
). Honeywell currently has a Zacks Rank #3 (Hold).