Image source: Honeywell Q4 2019 Earnings and 2020 Outlook Presentation
By Ankit Ajmera
(Reuters) – Boeing-supplier Honeywell International Inc. on Friday forecast 2020 sales below market expectations, citing a hit from the production freeze of 737 MAX planes on its aerospace unit.
Global aerospace supply chain has been thrown into disarray after Boeing Co. earlier this month froze production of the plane for the first time in more than 20 years.
Suppliers are expected to book billions of dollars in losses as the aircraft remains grounded for more than 10 months following two fatal crashes.
Honeywell, which makes 737 MAX parts including auxiliary power units, weather radars and cockpit advisory systems, said its expects “significant headwinds from the 737 MAX production delays” in 2020.
“The revenue impact (from the 737 MAX production halt) is meaningful. I mean it’s about a mid-triple-digit impact for millions of dollars,” Chief Executive Officer Darius Adamczyk said on a conference call with analysts.
Honeywell’s latest comments are in contrast with what it said last year, when it downplayed the 737 MAX impact on its sales as not significant.
Earlier this week Honeywell rival United Technologies Corp – which makes landing systems, avionics and interior lighting for the 737 MAX – warned that the aircraft’s production halt will hurt its full-year profit by about $350 million.
Honeywell said on Friday it expects the grounded 737 MAX to fly again by the middle of this year, in line with Boeing’s timeline for the aircraft’s return to service.
The company forecast 2020 sales of $36.7 billion to $37.8 billion, below analysts’ estimate of $38.11 billion, according to IBES data from Refinitiv.
The company said it expects 2020 earnings per share of $8.6 to $9, the midpoint of which was 1 cent above the estimate of $8.79.
Honeywell shares fell as much as 2.4% to $174 in early trading.
Reporting by Ankit Ajmera in Bengaluru; Editing by Arun Koyyur and Anil D’Silva