Monday, January 30, 2017

HONEYWELLL BLAMES SUPPLY CHAIN


How many manufacturers and retailers that blame Supply Chain Management do not transform and elevate their supply chains to mitigate the risk of supply chain problem occurrence?

Honeywell Posts Decline in Profit

Aerospace business continues to be a drag on conglomerate

Honeywell International Inc. posted lower organic revenue and profit for its latest quarter.
Honeywell International Inc. posted lower organic revenue and profit for its latest quarter. Photo: © eric miller / reuters/Reuters
Honeywell International Inc.‘s profit slipped in the fourth quarter as the conglomerate coped with declines in its aerospace division and supply-chain delays in its safety-systems businesses.
Overall, however, the quarter was a return to predictability for a company that had been a darling among industrials for its steady performance until some stumbles last fall, including a drop-off in sales related to servicing of its business-jet engines.
Business jets continued to be a drag on the Morris Plains, N.J., company; organic sales—which exclude currency effects and acquisitions—fell 5% for its aerospace business. But Honeywell is seeing a rebound in business linked to the oil-and-gas industry, as well as resilience in its distribution-systems business, which grew by double digits in China and India.
Chief Executive Dave Cote, in his final earnings presentation before his retirement at the end of March, predicted that “animal spirits”—signs of new enthusiasm among small and large business owners—in the U.S. economy would trigger greater growth.
“Hopefully if we can just get a few sparks here with some actual actions, there could be enough to really start to turn the herd,” Mr. Cote said. “We’re going to continue to plan for a slow-growth global economy, but it still feels more positive than it has in a while coming off of the worst recession since the Great Depression.”
Still, Honeywell executives expressed caution, especially on trade, which President Donald Trump has driven to the forefront in recent days. Honeywell, as much as any of its industrial competitors, is structured to benefit from globalization and free trade, with a major presence in China and manufacturing distributed around the globe.
“It’s kind of tough to be an economic island now, especially if you’re the No. 1 economy in the world, so it depends on how that gets handled and of course it’s a concern for us,” Mr. Cote said.
Chief Operating Officer Darius Adamczyk, who is to succeed Mr. Cote as CEO this spring, said the company is cautiously optimistic, saying talk of the Trump administration reshaping trade pacts and tariffs remains “pure speculation.”
For the just-completed quarter, Honeywell reported profit of $1.03 billion, or $1.34 a share, down from $1.19 billion, or $1.53 a share, a year earlier. Excluding restructuring and other costs, earnings per share were $1.74.
Revenue grew to $9.99 billion from $9.98 billion, though core organic sales fell 1%.
Shares of Honeywell were up 0.4% at $118.42 in 4 p.m. New York trading.
Mr. Cote signed off his final earnings call at the helm of the conglomerate in jocular fashion, with a winking endorsement of the New England Patriots and a series of reminders to analysts about which ones had been early to predict he could turn around the company he took over in 2002—and which hadn’t.
In 15 years as CEO, Mr. Cote was known for a carefully cultivated folksy image, a quick wit and a thick New Hampshire accent—in a note on Friday, Bernstein Research congratulated him on a solid fourth “quahtah.”
Corrections & Amplifications
Sales in Honeywell’s safety and productivity solutions unit rose 8.9%. An earlier version of this article incorrectly stated sales in the unit fell 2.2%.
He is also credited for engineering a largely successful turnaround at Honeywell, which was laboring when he took over shortly after a possible sale to General Electric Co. was scuttled.