Honeywell International Inc. cut its 2017 sales forecast as a downturn in the corporate-jet market hurts demand for the company’s cockpit controls, aircraft engines and other parts.
Revenue this year will be $38.6 billion to $39.5 billion, Honeywell said in a statement Friday. That marks a reduction from a December forecast of $39.2 billion to $40.1 billion.
“Business jets weakness persists,” the Morris Plains, New Jersey-based company said in outlining its expectations.
Private-aircraft deliveries have slumped as concern over slow growth has damped demand for corporate aircraft in the U.S. and Europe. Meanwhile, a drop in commodities prices has crimped orders in emerging markets such as Russia and Brazil. Honeywell supplies engines for such aircraft as the Bombardier Inc. Learjet 70 and Embraer SA Legacy 450.
Chief Financial Officer Tom Szlosek told analysts in December that sales to business-jet manufacturers would continue to decline this year and begin to recover in late 2018 and 2019 when more new aircraft models hit the market.
Honeywell fell 1.7 percent to $116.01 at 8:03 a.m. in New York, before the start of regular trading. Honeywell rose 20 percent during the 12 months ending Thursday, in line with the increase in the S&P 500 Index.
In the fourth quarter, adjusted earnings rose to $1.74 a share, matching the average of analysts’ estimates compiled by Bloomberg.
Total sales were little changed at $9.99 billion, trailing analysts’ estimates of $10.1 billion. Aerospace revenue dropped 8 percent to $3.67 billion.
Profit margins at the Performance Materials and Technologies, which contains energy-related businesses, widened by more than 5 percentage points in the fourth quarter. Sales were up 5 percent after adjusting for items such as last year’s spinoff of a resins and chemicals operation.
Honeywell has benefited from oil prices stabilizing around $50 a barrel, which has freed up projects that had been delayed. Natural gas prices in the fourth quarter averaged $3.17 per million British thermal units, almost a dollar more than a year earlier. Honeywell sells products such as catalysts that improve refining efficiency and filters for natural gas.
For the current quarter, Honeywell forecast earnings per share of $1.60 to $1.64, which at the midpoint is the same as analysts’ estimates.
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