Honeywell has reported better-than-expected third-quarter results and raised its full-year earnings guidance, as strong demand in its commercial aerospace and defence businesses helped drive sales growth.
The US industrial and technology group said sales rose 7% year-on-year, with organic sales up 6%, led by double-digit increases in its commercial aftermarket and defence and space segments.
Operating income fell 6%, but segment profit rose 5% to $2.4bn, supported by growth in its Energy and Sustainability Solutions and Building Automation divisions.
Operating margins narrowed by 220 basis points to 16.9%, while segment margins slipped 50 basis points to 23.1%, at the high end of previous guidance.
Earnings per share climbed 32% year-on-year to $2.86, with adjusted earnings up 9% to $2.82. Operating cash flow increased sharply by 65% to $3.3bn, though free cash flow fell 16% to $1.5bn.
Honeywell chairman and chief executive Vimal Kapur said the company delivered “strong financial results” while progressing with plans to split into three separate public companies.
“Increased orders across our business segments pushed the company’s total backlog to another record high,” he said. “We exceeded the high end of our guidance for both organic growth and adjusted earnings per share.”
Kapur added that Honeywell remains “well positioned” heading into the final quarter of the year, with new opportunities emerging from its Honeywell Forge digital platform, which supports recurring revenue growth.
The company also confirmed that the spin-off of its Solstice Advanced Materials division remains on track for completion by the end of October.
Including the impact of the separation, Honeywell now expects full-year sales between $40.7bn and $40.9bn, representing organic growth of around 6%.
It anticipates a segment margin of 22.9%–23%, with adjusted earnings per share now forecast between $10.60 and $10.70 — up 10 cents at the midpoint from its previous guidance.
Full-year operating cash flow is projected at $6.4bn–$6.8bn, with free cash flow in the range of $5.2bn–$5.6bn.
Honeywell’s updated outlook excludes the impact of its 2024 agreement with Bombardier, under which it expects organic sales growth of about 5% and a 3% rise in adjusted earnings per share year on year.