Honeywell profit beats as cost cuts soften aerospace sales hit

FILE PHOTO: A Honeywell logo is pictured on the company booth during the European Business Aviation Convention & Exhibition (EBACE) at Cointrin airport in Geneva, Switzerland, May 24, 2016. REUTERS/Denis Balibouse

(Reuters) - Honeywell International Inc HON.N on Friday reported a better-than-expected quarterly profit and forecast current-quarter earnings above estimates as cost controls and strong demand for its warehouse automation equipment partially offset poor sales in its main aerospace business.

The COVID-19 pandemic brought air travel to a virtual halt earlier in the year, hurting aero parts makers such as Honeywell, but a surge in online shopping has boosted sales at its warehouse automation equipment unit, which counts Inc AMZN.O among its customers.

Honeywell, which has furloughed workers, axed merit increases and cut board and executive pay, said it expects to return to growth and margin expansion in 2021. It raised its cost savings target for 2020 to a range of $1.5 billion to $1.6 billion, from $1.4 billion to $1.6 billion earlier.

“Honeywell retains one of the toughest end-market exposures among multi-industry companies. Therefore, we view the solid sequential revenue, operating improvement and sequential guidance as encouraging,” Gordon Haskett analyst John Inch said in a note.

Sales in the aerospace business, which makes parts for Boeing BA.N and Airbus AIR.PA planes, fell about 25% to $2.66 billion, improving from a 28% plunge in the second quarter as strong demand from the defense sector helped it beat analysts' expectation for a 29% fall.

Honeywell said sales from its safety and productivity solutions unit, which houses the automation equipment business, rose 8% to $1.58 billion in the quarter ended Sept. 30.

The health crisis has also boosted demand for personal protection equipment for industrial workers, Honeywell said.

The company expects fourth-quarter adjusted earnings per share between $1.97 and $2.02, above analysts’ estimate of $1.88.

Excluding items, Honeywell earned $1.56 per share, beating estimates of $1.49 per share, even as its net income plunged 53% to $758 million and sales fell 14% to $7.80 billion.

Reporting by Ankit Ajmera in Bengaluru; Editing by Devika Syamnath