Honeywell posts better-than-expected third-quarter earnings, lifts annual guidance

Investing.com - Honeywell reported third-quarter income which exceeded expectations, leading the conglomerate to raise its full-year guidance despite the separation of specialty chemicals subsidary Solstice Advanced Materials at the end of this month.

Among Honeywell’s sprawling operations, which include everything from industrial automation to sustainability solutions, its aerospace technologies division was one of the main drivers behind a 7% uptick in group-wide sales. Total revenue of $10.41 billion also exceeded Wall Street projections.

Earlier this month, Honeywell executives told Reuters the aerospace unit had been bolstered by demand for aviation electronics -- items that have not been as exposed to recent decreased availability of raw materials. Attaining engine manufacturing parts like castings and forgings, on the other hand, has proved to be more difficult for Honeywell, but signs of improvement have begun to emerge, Reuters reported.

Organic sales at the aerospace business climbed by 12% to $4.51 billion, topping expectations of $4.32 billion.

Honeywell, a supplier of products such as avionics and flight control systems to planemaking giants like Airbus and Boeing, said the aerospace unit’s commercial original equipment returned to growth during the quarter thanks to higher shipment volumes, while orders expanded at a double-digit rate.

Meanwhile, sales at the group’s industrial automation segment, which helps factories and warehouses mechanize their operations, rose by 1%. Analysts had anticipated that the figure would slip by 2.2%.

The results come as Honeywell, under pressure from activist investor Elliott Management, is splitting into three independently listed companies. Its aerospace and automation units will become separate entities, along with its Solstice advanced materials segment.

"As we progressed toward separating into three industry-leading public companies, we drove strong financial results and unlocked new value creation opportunities during the third quarter," said CEO Vimal Kapur in a statement.

Although the spinoff of Solstice -- set to be completed on October 30 -- is tipped to impact full-year returns, Honeywell raised its annual adjusted earnings per share guidance to $10.60 to $10.70, up $0.10 from its prior guidance range at the midpoint. Sales for the fiscal year are now expected to be $40.7 billion to $40.9 billion, versus $40.8 billion to $41.3 billion previously.

Shares in the conglomerate moved higher by more than 4% in premarket U.S. trading on Thursday.