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Honeywell Posts Profit Beat Though Sales Miss the Mark

Honeywell posts fourth-quarter adjusted earnings that beat analysts' forecasts, though sales come in lower than expected.

Honeywell International  (HON)  on Friday posted fourth-quarter earnings that beat analysts' expectations amid ongoing growth in its aerospace and building technology units and stronger demand for its supply-chain software and digital commercial offerings, though overall sales missed analysts' forecasts.

The Charlotte-based company said it earned $1.59 billion, or $2.06 an adjusted share, vs. $1.74 billion, or $1.91 a share in the comparable year-ago period. Analysts were forecasting earnings of $2.04 a share for the industrial conglomerate.

Growth in the company's "connected enterprise" business as well as in its digital and integrated supply chain initiatives helped bolster earnings for both the quarter and full year, even as the company took a charge for the spinoff of its building technologies unit.

Sales from all divisions, however, added up to $9.5 billion, down from $9.7 billion in the final three months of 2019 and below the $9.605 billion expected by analysts. 

 For 2020, however, Honeywell is predicting more sales and earnings growth as it continues with its cost-cutting efforts and benefits from steady aerospace demand, though the company will take a hit from the production halt of Boeing's  (BA)  737 MAX. 

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Honeywell said it expects sales of $36.7 billion to $37.8 billion for this year, on per-share earnings of between $8.60 and $9, in line with analysts' current forecasts of full-year earnings of $8.80 a share.

The outlook reflects strong demand for aerospace parts, as Honeywell benefits from new private-jet models and defense work. But Honeywell has about $1 million of parts in each 737 MAX, according to Jefferies analyst Sheila Kahyaoglu, which will temper growth for that division. 

Demand for productivity tools such as hand-held computers used by warehouse workers should also help bolster full-year sales and earnings. 

Honeywell is expecting 2020 operating cash flow of $6.6 billion to $7.1 billion, and free cash flow of $5.7 billion to $6.2 billion. 

Shares of Honeywell were down a little more than 2% at $174.68 in morning trading on Friday after ending the trading day Thursday up 1.52% at $178.34.

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