Honeywell forecasts weak first-quarter profit as supply chain snags hurt
Reuters
Published Feb 02, 2023 06:44AM ET
Updated Feb 02, 2023 11:02AM ET
By Nathan Gomes
(Reuters) -Honeywell International Inc forecast first-quarter adjusted profit below estimates, signaling strong demand in its high-margin aerospace unit was not enough to beat the impact of supply chain disruptions and labor shortages.
Shares of the industrial conglomerate, which counts Boeing (NYSE:BA) Co and Airbus SE (OTC:EADSY) as customers, fell nearly 5% to $197.32 in morning trade on Thursday.
Honeywell (NASDAQ:HON)'s aerospace peers General Electric (NYSE:GE) Co and Raytheon Technologies (NYSE:RTX) Corp have also flagged labor shortages and higher costs.
"The supply chain for mechanical components remains constrained due to skilled labor shortages among Tier 3 and 4 suppliers," Honeywell's chief financial officer Gregory Lewis said on post earnings call with analysts.
A shortage of crucial semiconductor chips and higher prices of raw materials have also hit aerospace and defense companies' ability to manufacture products over the past year, leading to delays in output.
Charlotte, North Carolina-based Honeywell expects adjusted earnings in the first quarter to be between $1.86 per share and $1.96, below analysts' average estimate of $2.03 per share, according to Refinitiv data.
It, however, forecast full-year sales between $36 billion and $37 billion, in line with analyst's average estimate, amid strong demand for air travel and oil.
Sustained demand for air travel has prompted more orders from airlines and planemakers for parts and service, benefiting aerospace companies such as Honeywell.
Quarterly sales in Honeywell's aerospace unit, which makes aircraft engines and radars, rose to $3.20 billion from $2.9 billion a year ago.
The company's overall quarterly net sales rose about 6% to $9.19 billion, but missed analysts' average estimate of $9.25 billion.
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Written By: Reuters
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