MEDIAS
NEWS - Press releases
Honeywell Reports Second Quarter Sales Up 13% To $9.7 Billion And Earnings Up 23% To $0.96 Per Share
Company Raises 2008 EPS Guidance to $3.75 - 3.85
MORRIS TOWNSHIP, N.J., July 18, 2008 --
Honeywell (NYSE: HON) today announced second quarter 2008 sales increased 13% to $9.7 billion from $8.5 billion last year. Earnings were up 23% to $0.96 per share, versus $0.78 per share last year. Cash flow from operations was $1,042 million versus $983 million in the second quarter of 2007 and free cash flow (cash flow from operations less capital expenditures) was $853 million, compared to $820 million last year. Year to date the company has generated cash flow from operations of $1,763 million versus $1,561 million in the same period last year and free cash flow (cash flow from operations less capital expenditures) of $1,424 million, compared to $1,278 million in 2007.
Honeywell (NYSE: HON) today announced second quarter 2008 sales increased 13% to $9.7 billion from $8.5 billion last year. Earnings were up 23% to $0.96 per share, versus $0.78 per share last year. Cash flow from operations was $1,042 million versus $983 million in the second quarter of 2007 and free cash flow (cash flow from operations less capital expenditures) was $853 million, compared to $820 million last year. Year to date the company has generated cash flow from operations of $1,763 million versus $1,561 million in the same period last year and free cash flow (cash flow from operations less capital expenditures) of $1,424 million, compared to $1,278 million in 2007.
“Honeywell delivered a strong second quarter,” said Honeywell Chairman and CEO Dave Cote. “These results reflect our diverse and global business portfolio and the strength of Honeywell’s operating disciplines. Aerospace continued to win significant new contracts, Automation and Control Solutions made acquisitions in key adjacent markets, Transportation Systems added new platform wins to its turbo technologies leadership position, and Specialty Materials had sales growth in all businesses and regions.”
“We expect double digit earnings growth in the second half,” continued Cote. “Our businesses are well positioned with long-term macro trends, such as safety, security, energy efficiency, and energy generation. We believe that our great positions in good industries and continued flawless execution on productivity initiatives – Honeywell Operating System, Velocity Product Development, and Functional Transformation – will help us deliver consistent and profitable growth even in this tough global economic environment.”
Honeywell is increasing its previously stated 2008 sales guidance to $37.6 – 38.2 billion and full-year earnings per share to $3.75 - 3.85. EPS guidance does not include the expected gain on the sale of the Consumables Solutions (CS) business. The company expects a gain on the sale of CS in the third quarter, which may be significantly offset by repositioning or other actions.
Second Quarter Segment Highlights
Aerospace
•Sales were up 8%, compared with the second quarter of 2007, driven by 7% growth in Commercial and 11% growth in Defense and Space. Commercial sales reflected growth of 6% in original equipment and 7% growth in aftermarket spares and services. Defense and Space sales included the positive impact of the Dimensions International acquisition and higher sales of certain surface systems.
•Segment profit grew 15%, while segment margin increased by 100 bps to 18.3%, due primarily to increased prices, productivity, and volume growth, partially offset by inflation and higher spending to support new platform growth.
•Aerospace announced a definitive agreement to sell its Consumables Solutions business to B/E Aerospace for $1.05 billion in cash and B/E common stock.
•Honeywell was awarded the third option year of a U.S. Army contract to improve performance and extend the life of the AGT1500 turbine engine that powers the M1 Abrams tactical vehicle. The option year is valued at $311 million, bringing the total contract value to more than $1 billion.
•Honeywell signed a contract with Southwest Airlines to provide aftermarket maintenance services on Southwest’s entire fleet of Boeing 737s for the next 10 years. The contract is an extension of an existing contract for similar services. Honeywell will provide aftermarket repair and overhaul services on its Auxiliary Power Units, hydro mechanical units, avionics, lighting, mechanical components, and wheels and brakes for Southwest’s entire fleet plus future aircraft deliveries.
Automation and Control Solutions
•Sales were up 19%, compared with the second quarter of 2007, driven by net growth from acquisitions and divestitures and a favorable impact from foreign exchange. Sales were up 22% in the Products businesses and up 15% in the Solutions businesses.
•Segment profit grew 17%, while segment margin decreased 20 bps to 10.8%. Segment profit was up due primarily to productivity savings, improved pricing, acquisitions (which were dilutive to segment margin), and the favorable impact of foreign exchange, partially offset by inflation.
•Honeywell Security expanded its presence in the $16 billion imaging, scanning, and mobility segment by announcing the acquisition of Metrologic Instruments, a data capture and collection hardware and software company. Metrologic will be part of Honeywell Imaging & Mobility, a business within Honeywell Security. Honeywell Imaging & Mobility also includes Hand Held Products, a leading manufacturer of imaging and mobility solutions, acquired by Honeywell last year.
•Building Solutions announced it has been awarded a $15 million contract by the City of Tallahassee, Fla., to implement a smart metering network that will allow the city to automatically collect electricity, natural gas, and water usage data from residents and local businesses. The network will include more than 220,000 electric, gas, and water meters and help reduce operating costs by up to $21 million over 15 years.
•Process Solutions announced Suncor Energy will use Honeywell UniSim® simulation technology to train operators at its Voyager Oil Sands Upgrader Operation in Northern Alberta, Canada. UniSim is integral to Suncor’s “Operational Readiness Initiatives,” which prepare operations staff for safe and efficient plant start-ups.
Transportation Systems
•Sales were up 6%, compared with the second quarter of 2007, driven by foreign exchange and higher volume and pricing to commercial engine manufacturers, partially offset by lower sales to European light vehicle manufacturers and continued softness in automotive aftermarket sales (CPG).
•Segment profit decreased by 5%, while segment margin decreased by 130 bps to 11.2%, due primarily to CPG volume declines and investments in product development to support future turbo platforms. These factors were partially offset by increased productivity in Turbo Technologies and, with respect to segment profit, the favorable impact of foreign exchange.
•Turbo Technologies was awarded contracts that include new technologies such as advanced gasoline turbochargers, diesel VNTs, two-stage systems, and micro-turbos estimated at more than $650 million in revenue over the life of the programs. The new platforms are expected to be launched in Europe, India, Korea, and the U.S. starting in 2009. Honeywell expects global sales for turbochargers to grow from 30% of the overall automotive segment to more than 37% by 2013.
•Turbo Technologies was chosen by Ford for the introduction of EcoBoost technology, which will come to market first on the 2010 Lincoln MKS model automobile in 2009. The new turbocharged V6 engine will perform like a comparable V8, but with increased fuel economy and reduced CO2 emissions.
Specialty Materials
•Sales were up 19% compared with the second quarter of 2007, driven by growth in all businesses, particularly UOP and Resins and Chemicals.
•Segment profit grew 6%, while segment margin decreased by 160 bps to 12.8%. The increase in segment profit was due primarily to increased pricing and productivity gains, which more than offset higher raw material costs and inflation. Increased pricing primarily reflects formula based pass through of higher raw material costs, which is dilutive to segment margins.
•UOP will partner with Honeywell Aerospace, Airbus, JetBlue Airways, and International Aero Engines to study sustainable biofuel use for commercial aircraft. UOP also joined the Algal Biomass Organization, which is led by Boeing and includes Air New Zealand, Continental, and Virgin Atlantic Airways, to seek ways to help commercialize sustainable, next-generation biofuels for use in commercial jetliners.
•Honeywell Specialty Films announced it has developed a new material to protect photovoltaic (PV) solar cells in heat pervasive environments. The new product, called Honeywell PowerShield™ PV325, protects PV modules - including the critical components that convert sunlight into electricity.
Honeywell will discuss its results during its investor conference call today starting at 8:00 a.m. EDT. To participate, please dial (706) 643-7681 a few minutes before the 8:00 a.m. start. Please mention to the operator that you are dialing in for Honeywell’s investor conference call. The live webcast of the investor call will be available through the “Investor Relations” section of the company’s Website (http://www.honeywell.com/investor). Investors can access a replay the
conference call from 11:00 a.m. EDT, July 18, until midnight, July 25, by dialing (706) 645-9291. The access code is 52407210.
Honeywell International is a $37 billion diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes and industry; automotive products; turbochargers; and specialty materials. Based in Morris Township, N.J., Honeywell's shares are traded on the New York, London and Chicago Stock Exchanges. For additional information, please visit www.honeywell.com.
This release contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of fact, that address activities, events or developments that we or our management intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Forward-looking statements are based on management’s assumptions and assessments in light of past experience and trends, current conditions, expected future developments and other relevant factors. They are not guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by our forward-looking statements. Our forward-looking statements are also subject to risks and uncertainties, which can affect our performance in both the near- and long-term. We identify the principal risks and uncertainties that affect our performance in our Form 10-K and other filings with the Securities and Exchange Commission.
Contacts:
Media
Robert C. Ferris
(973) 455-3388
rob.ferris@honeywell.com
Investor Relations
Murray Grainger
(973) 455-2222
murray.grainger@honeywell.com