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Honeywell Sees Best-Ever 4Q Revenue in 2017

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Honeywell’s 4Q17 revenue

Honeywell (HON) reported revenue of $10.84 billion in 4Q17, an 8.6% increase over 4Q16. Honeywell managed to beat analysts’ estimate of $10.80 billion and marked its highest-ever fourth-quarter revenue. Since 2012, Honeywell’s revenue has grown at a compound annual rate of 2.3%.

Honeywell’s 4Q17 revenue growth was primarily due to its organic growth of 6%, which was driven by continued growth in Honeywell UOP and its Intelligrated acquisition. During the quarter, Honeywell bagged quite a few new orders, strengthening its order book, and robust growth was seen in the aerospace aftermarket business. Favorable foreign currency exchange due to continued weakness in the US dollar accounted for the remaining revenue growth.

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Management’s comments

Honeywell president and CEO Darius Adamczyk stated that “Honeywell delivered a strong fourth quarter, capping an exceptional year for the company,” adding that “fourth-quarter sales grew six percent organically, leading to full-year organic sales growth of four percent, driven by robust growth in Aerospace aftermarket, UOP, Advanced Materials, and Intelligrated. We leveraged HOS Gold to drive outstanding growth and expand segment margins by 70 basis points for the year. Earnings per share were $1.85 in the fourth quarter and $7.11 for the full year, up 10 percent year over year, excluding the fourth-quarter charge related to U.S. tax reform and other items, as a result of our strong focus on growth and productivity.”

Revenue guidance

Honeywell expects 1Q18 revenue of $9.9 billion–$10.1 billion. The projected revenue is expected to be driven by continued growth in UOP from the execution of backlogs and aerospace aftermarket growth. Investors looking for indirect exposure to Honeywell could consider the Industrial Select Sector SPDR ETF (XLI), which has invested 4.9% of its portfolio in Honeywell. The fund also provides exposure to Boeing (BA), 3M (MMM), and United Technologies (UTX), of 7.5%, 6.0%, and 4.0%, respectively.

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