Honeywell revenue misses on weak demand from oil, gas customers

Fri Oct 16, 2015 1:47pm EDT
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By Ankit Ajmera and Lewis Krauskopf

(Reuters) - Honeywell International Inc (HON.N: Quote), a maker of industrial, aerospace and auto components, reported lower-than-expected quarterly revenue, hurt by weak demand from oil and gas customers.

The company, which got about 11 percent of its sales from the energy industry in 2014, also cut its full-year revenue forecast, sending its shares down as much as 3.2 percent to $95.33 on Friday.

As oil and gas companies slash capital spending due to weak crude oil prices, Honeywell's business that caters to the energy and chemicals industries among others was particularly hit.

Sales in the performance materials and technologies business, fell 13 percent in the third quarter. The business accounted for a quarter of Honeywell's total sales.

Sales fell 2 percent in Honeywell's aerospace business, its largest, and declined 3 percent in its automation and controls business.

Honeywell said sales in the performance materials and technologies business would be hurt in 2016 also due to declining orders from oil and gas customers.

"There are some pockets that have unfortunately created this temporary drag on us," Chief Financial Officer Tom Szlosek said in an interview, referring to the company's oil and gas-related business.

General Electric Co (GE.N: Quote) on Friday also said revenue in its oil and gas business dropped 16 percent in the latest quarter due to weak crude oil prices.   Continued...

David Cote, chairman and chief executive of Honeywell, speaks during The Economist's Buttonwood Gathering in New York October 24, 2012.   REUTERS/Carlo Allegri