Honeywell profit up 18 percent; shares jump

BOSTON (Reuters) - Diversified manufacturer Honeywell International Inc (HON.N) said quarterly profit rose nearly 18 percent, with sales up across all its units, sparking a 4.6 percent rise in its shares on Friday.

Strong demand from the aviation sector boosted Honeywell, the world's largest maker of cockpit electronics, as did continued investment, particularly outside the United States, in big infrastructure products like airports and refineries.

Honeywell said overall profit margins increased as a percentage of sales, a development that analysts said would be key to keeping the company on a growth track in the face of a slowing economy.

"That internal margin generation ... that definitely insulates you a little bit from the macro factors that are out there," said Tom Leritz, portfolio manager at Argent Capital Management, of Clayton, Missouri, which manages about $1 billion in assets and holds Honeywell shares.

Honeywell officials said so far they had seen no evidence of a feared U.S. recession in their results, but added that they were preparing the company for a possible slowdown as a protective measure.

"We don't really see it yet," Chief Executive Dave Cote told investors on a conference call. Referring to the recent bleak economic reports, he said, "It causes you to say, 'Let's plan conservatively. Let's plan our sales conservatively, let's plan our costs conservatively.' Even though we don't see the signs yet, we prefer to just be prepared."

MEETS WALL ST EXPECTATIONS

Honeywell said fourth-quarter earnings increased to $689 million, or 91 cents per share, from $585 million, or 72 cents a share, in the same quarter a year earlier.

Sales advanced 12 percent to $9.3 billion.

Analysts, on average, had expected earnings of 91 cents on sales of $8.9 billion, according to Reuters Estimates.

Segment profits in the quarter represented 13.7 percent of sales, up from 13.2 percent a year earlier.

Aerospace sales rose 11 percent from a year earlier, helped by both commercial and defense and space businesses. Sales from its automation and control business gained 13 percent.

"Business trends were very solid with sales above expectations across the board," wrote Deutsche Bank analyst Nigel Coe, in a note to clients.

Honeywell, which reported results late Thursday, said Friday it expects first-quarter profit to rise by 21 percent to 26 percent, to 80 cents to 83 cents per share, on revenue of $8.7 billion.

Analysts, on average, look for profit of 80 cents per share on $8.55 billion in revenue, according to Reuters Estimates.

The Morris Township, New Jersey-based company expects U.S. nonresidential construction spending -- which has held up in the face of turmoil in the housing market -- to slow this year and expects aviation activity in the United States to ease but continue to grow, Chief Financial Officer Dave Anderson said in an interview.

Outside the U.S., the company expects demand in Europe to cool, but sees sales in Asia remaining on a strong growth footing, Anderson said.

Honeywell shares rose $2.60 to $58.80 on the New York Stock Exchange.

With Friday's gain, Honeywell shares are down 5 so far this year, a more modest decline than the 7 percent fall of the Dow Jones industrial average (.DJI).

(Additional reporting by Ritsuko Ando in New York; Editing by Steve Orlofsky/Jeffrey Benkoe)