Honeywell International Inc. HON released its second-quarter results before the opening bell on July 24. Both the top and bottom line exceeded analysts’ expectations but were down year-over-year.
The industrial conglomerate recorded adjusted earnings per share of $1.26, which decreased 40% from the prior-year quarter but beat estimates by 5 cents. Quarterly revenue declined 19% on a year-over-year basis to $7.48 billion. Analysts had predicted revenue of $7.29 billion.
CEO Darius Adamczyk had the following to say:
"The second quarter was a challenging one, but we executed on the three things that will enable us to weather this downturn: aggressively managing cost, driving sales growth where demand is strong, and investing in exciting new technologies that, through careful attention to customer and end-user needs, will help keep people safe when they get back to the workplace, back to play, back to travel, and back to life."
Segment details
Revenue for the aerospace segment plunged 28% to $2.54 billion in the second quarter. Sales on an organic basis declined 27% reflecting lower volume in the aviation original equipment business, which was partially negated by growth in the defense and space business. The segment’s margin contracted 510 basis points, which was mainly driven by lower volume and sales mix.
Sales at Honeywell Business Technology tumbled 19% to $1.18 billion. Organic sales were down 19% due to poor performance of the commercial fire and building management products. As a result of commercial excellence and productivity measures, the segment’s margins soared 50 basis points to 21.2%.
In the Performance Materials and Technologies segment, revenue fell 19% to $2.22 billion. Organic sales were down 17%, while the segment’s margin fell 460 basis points to roughly 19%.
Safety and productivity solutions sales amounted to $1.46 billion in the reported quarter, which reflected a decline of 1% year over year. However, organic sales grew 1% due to triple-digit growth in intelligrated and respiratory personal protective equipment, which was partially offset by lower demand for gas sensing and productivity products. Margins expanded 150 basis points to 13.8%.
Guidance
Looking forward, Honeywell anticipates commercial aerospace and oil and gas demand to go down rapidly due to the ongoing economic decline. This will have an adverse impact on the company’s overall revenue.
The company withdrew full-year 2020 guidance.
Disclosure: I do not hold any positions in the stocks mentioned.
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