Oct 18 Honeywell International Inc on Friday reported lower-than-expected quarterly revenue, due in part to supply problems at its defense unit, and the U.S. manufacturing conglomerate cut its full-year sales forecast.
Shares of Honeywell, which also makes cockpit electronics and systems to manage the climate and security of large buildings, fell more than 3 percent.
Third-quarter sales dropped 11 percent in the Defense & Space Division, which supplies parts and equipment to military and government projects. Honeywell attributed the decline mainly to supply chain problems and the U.S. government sequestration program, a series of spending cuts on federal projects.
"We just didn't get parts or components for a number of the products we needed to have in order to ship them, or we had quality issues," Chief Financial Officer David Anderson said in an interview. "It's not lost sales; it's just delayed revenue."
The supply problems have largely been fixed and should not resurface, Anderson said.
Honeywell has been working to increase productivity and cut costs in the past year, part of a wide-ranging plan to improve results. As a result, the company raised the bottom end of its full-year profit outlook by 5 cents a share.
The company has been able to increase labor performance due to its restructuring programs, in some cases doubling productivity, Anderson said.
"It's in our DNA to aggressively manage our cost structure," he said.
Honeywell now expects to earn $4.90 to $4.95 per share in 2013. The top end of the forecast matches analysts' expectations, according to Thomson Reuters I/B/E/S.
The company, though, now expects 2013 revenue of $38.8 billion to $39 billion, down from a previous forecast of $38.9 billion to $39.3 billion.
The delayed closing of Honeywell's $600 million purchase of mobile computing device maker Intermec was the major reason for the lowered revenue forecast. The deal closed in September, but Honeywell had expected that to happen earlier in the year.
The company posted third-quarter net income of $990 million, or $1.24 per share, compared with $950 million, or $1.20 per share, a year earlier.
Revenue rose 3 percent to $9.65 billion, but missed analysts' expectations of $9.92 billion.
Chief Executive Officer David Cote said on a conference call with investors that performance should continue to improve next year.
Shares of the Morris Township, New Jersey-based company were down 3.1 percent at $84.21 in midday trading.