Honeywell sales projections fall short due to ongoing supply-chain disruptions
By Utkarsh Shetti and Anandita Mehrotra
(Reuters) -Honeywell projected annual sales below Wall Street expectations and missed quarterly revenue estimates on Thursday as the industrial giant struggles with persistent supply-chain disruptions and weakness in its industrial automation business.
The automation segment, which helps factories and plants mechanize their manufacturing processes, reported a 5% decline in organic sales for the third quarter, mainly due to soft demand from warehouses.
“Industrial automation has struggled for some time now due to prolonged headwinds in the Intelligrated warehouse automation business,” Jake Levinson, an analyst at Melius Research said.
“They rode the pandemic-driven boom in warehouse construction, notably as it relates to Amazon (NASDAQ:AMZN). But the overhang from that cycle has been painful,” he said.
The company’s shares were down 4% in morning trade.
In a post-earnings call with analysts, executives said some “discrete” supply-chain snags in aerospace prodded the company to reconsider its expectations for the year, while Hurricane Helene disrupted some manufacturing.
GE Aerospace earlier in the week blamed supply-chain constraints for a decline in jet engine deliveries that is weighing on its revenue.
Honeywell (NASDAQ:HON) CEO Vimal Kapur also addressed the near six-weeks workers strike at customer Boeing (NYSE:BA).
“The Boeing circumstances are obviously very challenging. We all saw the results of the vote yesterday night, which is unfortunate,” he said.
However, demand from Boeing has not dropped “demonstrably” from before the strike, Honeywell said.
The company estimated overall 2024 sales between $38.6 billion and $38.8 billion, compared with analysts’ average estimate of $39.20 billion, according to data compiled by LSEG.
Honeywell said on Thursday it was looking to divest its personal protective equipment business to further streamline its operations, as part of CEO Kapur’s focus on the so-called mega trends of automation, the future of aviation and energy transition.
Total sales rose 5.6% to $9.73 billion in the quarter ended Sept. 30, falling short of estimates of $9.90 billion.