TRENTON, N.J. (AP) — Aerospace manufacturer Honeywell International's 2004 financial forecast fell well below analysts' expectations, sending the company's shares down slightly.
Morris Township-based Honeywell, which has an automotive filter manufacturing operation in Clearfield, said revenues and profits will be up in its four business segments next year, but those gains would be more than offset by an increase of 30 cents per share to 58 cents in expenses for pensions and other benefits to former employees.
Honeywell said it expects earnings next year to range from $1.40 to $1.55 per share, excluding the costs of "post-employment benefits." The consensus forecast of analysts surveyed by Thomson First Call was $1.59 per share.
Honeywell shares fell 34 cents, or 1.1 percent, to $30.49 in trading Tuesday on the New York Stock Exchange.
Paul Nisbet, aerospace analyst at JSA Research Inc., said he was disappointed by both the higher pension costs and Honeywell's forecast that revenues next year will grow only 2 percent to 4 percent, to about $23.6 billion. Nisbet was expecting revenues to grow 5 percent over 2003's estimated $22.9 billion, for a total of $24.05 billion.
"It's not chump change," he said of the difference. "That's not very good news as to earnings growth or recovery from the slump they've been in."
As a result, Nisbet reduced his 2004 forecast from $1.65 per share to $1.45 per share, nine cents below the $1.54 per share Honeywell said it will earn for 2003. The analysts' consensus for this year is $1.56 per share, according to Thomson First Call.
Honeywell also said it expects earnings per share of 47 cents in its fourth quarter, matching both analysts' consensus and the company's prior guidance.
The guidance was announced during Honeywell's annual business briefing with analysts.
"The company continues to perform well, delivering solid earnings and cash flow while also investing in growth initiatives," Honeywell's chief financial officer, David Anderson, said in a prepared statement.
"We have good momentum going into 2004 and while there are some limited signs of improvement in our end markets, we are not dependent on significant economic improvement to meet our guidance," Anderson said.
Honeywell said it likely will make a voluntary contribution to its pension fund of up to $500 million in the current quarter. It also said it expects cash flow from operations to reach about $2.1 billion for 2003.
Honeywell said it expects revenues from aerospace products and services, its biggest segment, to rise 1 percent to 3 percent to about $9 billion next year. The No. 2 segment, automation and control systems for buildings, homes and industry, should grow 2 percent to 4 percent to a total of $7.6 billion in 2004.
The company also said its revenues for turbochargers should jump 8 percent to 9 percent, but total transportation revenues will grow only 4 percent to 6 percent, to an estimated total of $3.8 billion. The specialty materials business is forecast to grow 1 percent to 3 percent, to $3.2 billion next year.
Nisbet noted that Honeywell is hamstrung because its biggest customer, aircraft maker Boeing Co., is not going to deliver more airplanes next year than this year.