Honeywell beats fourth-quarter earnings forecasts

Honeywell traded slightly higher in pre-market trading on Friday after raising its 2018 earnings outlook.

The US industrial conglomerate cited a positive impact from US tax reform, which lowers its tax rate for 2018.

Revenue increase

In its fourth-quarter earnings release, Honeywell reported organic sales growth of 6%, driven by strong growth in the aerospace aftermarket, petroleum products company Honeywell UOP and advanced materials.

Overall revenue rose modestly ahead of expectations, growing 8.6% to $10.84bn.

Tax impact

A $3.8bn one-off tax provision due to the immediate impact of President Trump´s tax reforms saw the company report a $2.4bn net loss for the quarter.

However, the company was decidedly upbeat over the longer-term impact of tax reform on the bottom line given a sizeable reduction in its effective tax rate for 2018 and beyond.

Excluding the impact of the one-off $3.8bn tax provision, Honeywell earned $1.85 per share in the quarter, slightly ahead of analysts´ expectations of $1.84.

Transformation

“Honeywell’s transformation to a software-industrial leader is well underway, and in 2018, we expect to complete the spin-offs of our Homes and Global Distribution business, and our Transportation Systems business, which will position Honeywell for future growth and margin expansion. After the spin-offs, these businesses will be better positioned to maximize shareowner value through focused strategic decision making and capital allocation tailored for their end markets,” said chief executive Darius Adamczyk.