Diversified technology and manufacturing company Honeywell International Inc. (HON) said Monday that it expects approximately 6%-8% compound annual sales growth over the next five years and continued strong cash flow generation over that time period as the economy recovers. The company also said it is targeting segment margins in the range of 16%-18% in five years.
Honeywell said it sees recovery and growth beginning in 2010. Dave Cote, Chairman and Chief Executive Officer of Honeywell, said, "We're ready for economic recovery. Honeywell is a stronger and leaner company today, and we're expecting industry-leading performance over the next five years. We are building off a stronger base that will enable us to perform even better in the recovery."
At the company's investor conference on Monday, New Jersey-based Honeywell discussed important global growth factors, including favorable macro-trends, such as energy efficiency, safety, and security, and key technologies and products like refining processes for bio-renewables, Smart Grid thermostats, low-global-warming-potential refrigerants, air safety technologies, and turbochargers.
Honeywell noted that its aerospace segment has won more than $92 billion in aircraft contracts, including multiple product wins on new platforms, since 2005. The segment also recorded $2 billion in Defense & Space services contract wins in 2009.
The company said its automation and control solutions segment introduced 400 new products in 2009 and won significant new business, including a worldwide contract with UPS for more than 100,000 Honeywell handheld devices. The segment also won more than $650 million in energy efficiency orders in 2009.
Honeywell's transportation systems segment expects more than 100 product launches to generate a 20% revenue increase in 2010. The company noted that the segment has won nearly half of all new turbocharger platforms since 2007. The company expects favorable macro-trends and energy efficiency legislation to drive demand for turbocharging technologies, with the largest opportunity in the United States.
The company's specialty materials segment expects 80 new product launches in 2010, with more than 300 new products under development. The segment was awarded $60 million in government stimulus funding.
Last Friday, Honeywell updated its updated its earnings and sales guidance for the first quarter of fiscal year 2010, while reaffirming its full year sales and earnings view. The company said its "outlook is bright," adding that its first-quarter guidance range reflects continued strong operational performance.
For the first quarter, Honeywell updated its earnings to a range of $0.40-$0.45 per share, excluding the potential negative impact of proposed health legislation that was previously included in its first quarter earnings guidance. The company confirmed sales for the quarter to be between $7.2 billion and $7.6 billion. On average, analysts polled by Thomson Reuters expect the company to report earnings of $0.42 per share for the quarter on revenues of $7.49 billion. Analysts estimates typically exclude special items.
For fiscal year 2010, the Morris Township, New Jersey-based company maintained its full-year earnings guidance in the range of $2.20-$2.40 per share, and sales in the range of $31.3 billion-$32.2 billion. Analysts expect the company to earn $2.38 per share for the year on 2.9% growth in revenues to $31.82 billion.
In late January, Honeywell reported a decline in profit for the fourth quarter to $698 million or $0.91 per share from $707 million or $0.97 per share in the prior-year quarter, dented by weak commercial aerospace and equipment sales. Quarterly net sales declined to $8.07 billion from $8.71 billion in the same period of the previous year.
HON closed Monday's regular trading session at $40.15, down $0.07 or 0.17% on a volume of 4.07 million shares.
For comments and feedback: editorial@rttnews.com