Honeywell cuts revenue forecast as defense unit lags
(Reuters) - Honeywell International Inc (HON.N: Quote) on Friday reported lower-than-expected quarterly revenue, due in part to supply problems at its defense unit, and the U.S. manufacturing conglomerate cut its full-year sales forecast.
Shares of Honeywell, which also makes cockpit electronics and systems to manage the climate and security of large buildings, fell more than 3 percent.
Third-quarter sales dropped 11 percent in the Defense & Space Division, which supplies parts and equipment to military and government projects. Honeywell attributed the decline mainly to supply chain problems and the U.S. government sequestration program, a series of spending cuts on federal projects.
"We just didn't get parts or components for a number of the products we needed to have in order to ship them, or we had quality issues," Chief Financial Officer David Anderson said in an interview. "It's not lost sales; it's just delayed revenue."
The supply problems have largely been fixed and should not resurface, Anderson said.
Honeywell has been working to increase productivity and cut costs in the past year, part of a wide-ranging plan to improve results. As a result, the company raised the bottom end of its full-year profit outlook by 5 cents a share.
The company has been able to increase labor performance due to its restructuring programs, in some cases doubling productivity, Anderson said.
"It's in our DNA to aggressively manage our cost structure," he said.
Honeywell now expects to earn $4.90 to $4.95 per share in 2013. The top end of the forecast matches analysts' expectations, according to Thomson Reuters I/B/E/S. Continued...