Honeywell Q2 Earnings: Better-Than-Expected Quarter Leads To Raised Guidance

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Honeywell International reported a decent quarter this time around, on the back of better-than-expected performance in its Aerospace and energy related businesses. This performance helped the company beat both the revenue and earnings consensus estimates, quite easily. In this respect, management decided to raise the company’s full-year guidance. It now expects revenues to be in the $39.3−$40 billion range, while earnings per share is expected in the $7.00-$7.10 range. We can expect the rest of the year to carry forward a similar momentum, as each segment positions itself for sustained future growth.

Key Highlights:

  • As mentioned above, the Aerospace segment witnessed better-than-expected performance in the quarter. The segment recorded only a 3% fall in sales in comparison to the expected 5-7% decrease. The top line was benefited by continued strength in the commercial aftermarket sales, growing sales of retrofits modifications and upgrades, and robust fares demand in the air transport and regional segment. On the flip side, OE dynamics continue to show weakness in business and general aviation. Overall, OE sales were down 5%.
  • Defense sales were up by about 2% on the back of higher deliveries at the F-35 program, and sensors and guidance systems within the U.S. defense segment. As expected, the growth was partially offset by the lag in the space and commercial helicopter markets. That said, with heavier F-35 orders the world over, an increasing DoD budget, and increasing oil prices, we can expect to see business boom in the coming quarters.
  • Growth in productivity products was hurt in the quarter primarily due to the decrease in North American sales, particularly in the mobility business. That said, the company expects to see some improvement in the market over Q3 and Q4. Despite this, the mobility business is expected to remain soft until 2018, when sales from the company’s more aggressive launches begin to be realized.
  • Intelligrated continues to show great results. It drove more than 30% of the growth at Safety and Productivity Solutions this time around. Orders and backlog at the business continue to grow at a modest pace. We can expect the top line to show significant improvements over the remainder of the year.
  • As previously mentioned, Honeywell acquired Nextnine, a leading provider of CyberSecurity solutions for industrial sites, in an effort to boost business at Performance Materials and Technologies. The combination of Nextnine’s growing CyberSecurity business and Honeywell’s process solutions is expected to boost sales at a significant rate in the future.

 

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