Updated with information from Honeywell's guidance call.
The Morristown, N.J.-based technology and manufacturing company said 2012 per-share earnings should increase 6% to 12% from 2011 to between $4.25 and $4.50.
Honeywell said it expects free cash flow in 2012 of about $3.5 billion, the same amount it anticipated in 2011."We're planning for a more challenging macro environment in 2012," CEO Dave Cote said in a statement Thursday. "While key economic indicators show slower year-over-year growth in GDP and industrial production globally, we expect to grow faster than the end markets we serve, mainly driven by our robust long-cycle backlog of almost $16 billion, strong commercial aerospace aftermarket growth, and continued contributions from our short-cycle businesses. We feel confident that our portfolio mix and continued margin expansion will deliver strong earnings growth and free cash flow conversion in 2012." One area in which the company anticipates a downturn for the next few years is in its defense business. Chief Financial Officer Dave Anderson said on the company's conference call Thursday that he expects a "manageable" decline in this area and he forecasts "low single-digit declines on a compound basis." Honeywell has been restructuring this business since 2010 and anticipates growth to come from non-Department of Defense sources and international customers, he added. Honeywell said it expects a recession in Europe during the first half of 2012. About 75% of the company's European sales are in northern European countries such as Germany, France and the Netherlands, Anderson said during the conference call, adding that 17% of its European sales are in countries along the southern periphery. Honeywell earlier Thursday reiterated its 2011 full-year guidance, which includes sales of $36.5 billion, an increase of 13% from 2010, and earnings of $4.03 a share on a pro forma basis, an increase of 34%. In October, Honeywell raised its 2011 full-year earnings per share to a range of $4.00 to $4.05 from previous guidance of between $3.85 to $4.00. Analysts forecast Honeywell to earn $4.03 a share in 2011; they expect 2012 profit of $4.43 a share. Shares of Honeywell rose about 1.7% in trading Thursday to $52.42. -- Written by Alexandra Zendrian
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