Image source: Honeywell First Quarter 2021 Earnings Release, April 23, 2021
By Shreyasee Raj
Honeywell International Inc said on Friday sales at its aerospace business would trend at the lower end of its full-year forecast due to a slow recovery in its high-margin commercial aftermarket sales business, sending shares down 3%.
Honeywell, which makes aircraft parts for planes manufactured by Boeing Co and Canada's Bombardier Inc, saw its revenue tumble after the COVID-19 pandemic brought air travel to a standstill.
Rising infection rates and the lack of peak holiday travel led to fewer flight hours and hit the company's air transport aftermarket sales, which fell 48% from last year.
"Weakness in commercial aero and oil & gas are persisting longer than hoped for," said RBC analyst Deane Dray.
While the company expects improving domestic travel to drive commercial aftermarket sales in the second quarter, Chief Financial Officer Gregory Lewis warned the effect would be tempered by "ongoing softness in international travel as flight hours remain far below pre-COVID levels."
Honeywell also flagged supply constraints in the second quarter citing a shortage of semiconductors.
In a bright spot, sales of Honeywell's safety and productivity solutions business jumped 49%, helping the company top profit and revenue estimates.
A boom in online shopping during the pandemic had boosted sales of its warehouse automation unit, a part of its safety and productivity solutions business, which is used by customers including Amazon.com.
Honeywell now expects full-year sales to be between $34 billion and $34.8 billion, up from its prior forecast of $33.4 billion to $34.4 billion.
In January, the company had forecast organic sales growth at its aerospace unit to be flat to up in low-single digits in 2021.
Net income attributable to Honeywell fell nearly 10% to $1.43 billion in the first quarter. On an adjusted basis, the company earned $1.92 per share, beating estimates of $1.80 per share, according to Refinitiv data.