New Jersey-based Honeywell International (NYSE: HON ) joined a Friday parade that included conglomerate 3M (NYSE: MMM ) and oilfield services king Schlumberger (NYSE: SLB ) in disclosing soft March quarters and little optimism for what lies ahead for the remainder of 2009.
For the quarter, the company earned $399 million, or $0.54 a shares, down 38% on the net income line from last year's $647 million, or $0.85 a share. Sales fell by 15% to $7.6 billion from $8.90 billion in the same period a year ago.
Unfortunately, the company's results were hit hard by a combination of soft sales in both the automotive and aircraft sectors. On the Aerospace side, sales were down 9% and its earnings slid by 13%. Nevertheless, there were positives for the unit: Along with Australia's Quantas Airlines, Honeywell has received approval to test a new satellite-based landing system. In addition, the company inked a $70 million contract with the U.S. Air Force involving new technologies for gas turbine engines.
However, the strength of the company in the quarter was probably thanks to its Automation and Control Solutions unit, which, while experiencing a 6% sales decline (mostly due to foreign exchanged fluctuations), was one of 16 companies to garner a U.S. Army Corps of Engineers energy efficiency contract. The project could yield as much as $900 million in revenue during the next decade.
On the other side of the coin, the Transportation Systems group saw its sales plummet by 41%, obviously based largely on sluggishness in the automotive market. Nevertheless, Foolish car buffs will be interested to know that Honeywell introduced technology for Jaguar that will reduce both fuel consumption and CO2 emissions while boosting V6 engine performance to that of current V8 engine standards.
And finally, Honeywell's Specialty Materials group saw its sales slide by 25% from last year's March quarter. The primary culprit was lower volumes at the UOP unit, which supplies technology to a variety of industries, including the energy and petrochemical sectors.
Like a variety of industrial companies, including such industrial behemoths as DuPont (NYSE: DD ) and Caterpillar (NYSE: CAT ) , Honeywell lowered its earnings expectations for the remainder of the year. The new range is $2.85 to $3.20 a share, down from the prior $3.20 to $3.55 spread.
As with so many industrial companies, Honeywell's world will improve, although it's impossible to even come close to predicting the precise timing. Nevertheless, in Honeywell's case, with its forward P/E near 10%, its 34% return on equity, and its nearly 4% dividend, I would venture that the company merits careful monitoring by Foolish investors.
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