Honeywell International Inc. (NYSE: HON) reported a 2% decline in earnings for the first quarter of 2019 as the spin-offs of the Transportation Systems business and the Homes and ADI Global Distribution business dragged net sales lower by 15%. However, the results exceeded analysts’ expectations. The company raised its 2019 sales and earnings guidance.
Net income declined by 1.6% to $1.42 billion while earnings rose by 2% to $1.92 per share helped by the lower weighted average number of shares outstanding. Adjusted earnings grew by 13% to $1.92 per share.
Net sales dropped by 15% to $8.88 billion due to the spin-offs of the Transportation Systems business and the Homes and ADI Global Distribution business as well as the unfavorable impact of foreign currency translation. Organic sales grew 8% led by the company’s long-cycle businesses in commercial aerospace, defense, and warehouse and process automation, and strong demand for commercial fire and security products.
Looking ahead into the full year 2019, the company lifted its sales outlook to the range of $36.5 billion to $37.2 billion from a prior range of $36 billion to $36.9 billion. Earnings guidance is raised to the range of $7.90 to $8.15 per share from the $7.80 to $8.10 per share range.
The company increased its organic sales growth forecast to the range of 3% to 6% from the previous range of 2% to 5%. Operating cash flow guidance was narrowed to the range of $6 billion to $6.5 billion from the prior range of $5.9 billion to $6.5 billion. Segment margin is still predicted to be in the range of 20.7% to 21% for the full year 2019.
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For the first quarter, Aerospace sales increased by 10% on an organic basis driven by robust demand from business aviation original equipment manufacturers, continued strength in the U.S. and international defense business, and growth in the commercial aviation aftermarket.
Honeywell Building Technologies sales were up 9% on an organic basis driven by strong demand for commercial fire and security offerings, and global building projects growth. Safety and Productivity Solutions sales grew by 10% on an organic basis driven by continued double-digit sales growth in the Intelligrated warehouse automation business, robust demand in sensing and IoT, and strong demand across China.
Performance Materials and Technologies sales were up 5% on an organic basis helped by the broad-based growth in automation projects and maintenance and migration services in Process Solutions, as well as continued demand for fluorine products.
Shares of Honeywell ended Wednesday’s regular session up 0.02% at $162.89 on the NYSE. Following the earnings release, the stock inched up over 1% in the premarket session.