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Honeywell Reports Record 1st-Quarter Revenue in 1Q18

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Honeywell’s 1Q18 revenue

Honeywell International (HON) reported revenue of $10.4 billion in 1Q18, marking a 9.5% increase from 1Q17. Honeywell beat analysts’ estimate of $10.0 billion and marked its highest-ever first-quarter revenue. Since 2012, Honeywell’s first quarter revenue has grown at a compound annual rate of 2.2%. Its product sales rose 9.2% in 1Q18, and its service sales rose 10.5%.

Honeywell’s 1Q18 revenue growth was primarily due to its organic growth of 5% and foreign currency translations. Its organic growth was primarily driven by Honeywell Intelligrated, due to an increase in warehouse automation. A higher demand for short-cycle process automation added to the quarter’s revenue growth. HON also saw strong demand for original equipment for commercial aviation and US defense.

Each of HON’s reporting segments grew, led by Aerospace and Safety and Productivity Solutions. We’ll look into the company’s segment-wise performance later in this series.

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Management’s comments

Honeywell president and CEO Darius Adamczyk stated that “Honeywell had a very strong start to 2018, with first-quarter results that were driven by exceptional sales and operational performance. Organic sales grew 5 percent, driven by strong demand for original equipment for commercial aviation; U.S. defense; continued sales and orders growth in the warehouse automation business, Intelligrated; and short-cycle demand in process automation. Segment margin expanded by 40 basis points as a result of our Commercial Excellence efforts and from the Honeywell Operating System, including material productivity and volume leverage.”

Revenue guidance

Honeywell’s strong revenue growth in 1Q18 prompted it to raise its fiscal 2018 revenue guidance to $42.7 billion–$43.5 billion from $41.8 billion–$42.5 billion.

Investors seeking indirect exposure to Honeywell could consider the Industrial Select Sector SPDR ETF (XLI), which has invested 4.8% of its portfolio in Honeywell. The fund also provides exposure to Boeing (BA), 3M (MMM), and United Technologies (UTX), of 8.0%, 5.6%, and 3.9%, respectively.

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