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4-Traders Homepage  >  Equities  >  Nyse  >  Honeywell International Inc.    HON

Delayed Quote. Delayed  - 10/21 10:02:50 pm
108.96 USD   +0.76%
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GE Cuts Full-Year Sales Forecast

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10/21/2016 | 08:06pm CEST

General Electric Co. cut its full-year sales forecast after reporting declining third-quarter orders and continued weakness in its oil and gas equipment business, the latest sluggish report from an industrial company.

The company said third-quarter organic orders-which exclude currency swings, acquisitions and dispositions-fell 6%, and industrial profits slipped 4.6% to $4.32 billion in the quarter. It now expects revenue excluding acquisitions and divestitures to be flat to up 2% this year, from an earlier view of up 2% to 4%.

"Global growth continues, but at a low level," Chief Executive Jeff Immelt said on a conference call. "We plan to control our cost even tighter as we navigate this environment."

It isn't alone in navigating rough waters. Rival Honeywell International Inc. startled investors earlier this month when it cut its full-year sales and profit guidance after it was surprised by a drop-off in orders in September.

Boston-based GE, which makes a range of industrial equipment from jet engines to MRI machines, is under increasing pressure to show that the company's 2015 pivot away from financial services and renewed focus on its industrial businesses is yielding benefits to investors.

That task may be more complicated thanks to Trian Fund Management LP, the activist firm that announced a $2.5 billion stake in the company a little more than one year ago. Trian has urged the company to return cash to its investors by borrowing up to $20 billion and buying back its own shares, and is pushing GE to drive profit growth.

GE said Friday it plans to increase its share buyback plans by $4 billion to more than $22 billion for the year. It also reaffirmed a critical earnings target for 2018 despite lower-than-anticipated operating profit this year.

Shares of the company, which had fallen 11% in the three months through Thursday's close, fell 1% in recent trading to $28.73.

The big problem for sales and earnings continues to be oil. Low prices have triggered the postponement or cancellation of major projects in the industry, hurting companies like GE that sell equipment for pumping and drilling.

Oil-and-gas revenue fell 25% in the third quarter, and segment profit fell 42%. GE has already been cutting costs aggressively in the oil and gas unit, closing facilities and trying to standardize product offerings to reduce expenses. Chief Financial Officer Jeffrey Bornstein said the oil and gas business was on pace to hit a cost-cutting target of roughly $800 million for the year, with room for more "incremental" cost reduction in the coming year.

GE also will seek other cost-cuts "across the entirety of the company" to help account for the long slide of the oil and gas business and to ensure that GE still hits its target of achieving $2 in earnings per share in 2018, Mr. Bornstein said.

Several analysts who cover the company have recently sounded skeptical that GE will be able to hit that goal, which Mr. Immelt laid out last year when he announced plans to sell off most of its lending business. On Friday, the CEO affirmed it, noting that "all of our compensation plans" are tied to GE hitting that 2018 earnings target.

GE didn't offer any update on its planned acquisitions of a pair of European 3-D printing companies-SLM Solutions Group AG and Arcam AB-that have faced trouble garnering enough shareholder support. Mr. Bornstein said GE won't increase its tender offer for SLM, despite opposition from hedge fund Elliott Management Corp., which owns more than 20% of the German firm's shares. GE could acquire other 3-D printing firms if the Arcam and SLM deals fall through, he said.

There were bright spots elsewhere, including a 66% increase in sales in the company's renewable-energy business, and revenue from its largest industrial segment, which makes turbines for power plants, rose 37%.

Overall for the September quarter, GE reported a profit of $2.03 billion, or 22 cents a share after the payout of preferred dividends, compared with $2.51 billion, or 25 cents a share, a year ago. Revenue rose 4.4% to $29.27 billion.

Write to Ted Mann at ted.mann@wsj.com and Joshua Jamerson at joshua.jamerson@wsj.com

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Financials ($)
Sales 2016 39 602 M
EBIT 2016 7 163 M
Net income 2016 5 075 M
Debt 2016 5 394 M
Yield 2016 2,19%
P/E ratio 2016 16,57
P/E ratio 2017 15,31
EV / Sales 2016 2,23x
EV / Sales 2017 2,09x
Capitalization 82 905 M
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Honeywell International In Technical Analysis Chart | HON | US4385161066 | 4-Traders
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Mean consensus OUTPERFORM
Number of Analysts 21
Average target price 124 $
Spread / Average Target 14%
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David M. Cote Chairman & Chief Executive Officer
Darius Adamczyk President & Chief Operating Officer
Thomas A. Szlosek Chief Financial Officer & Senior Vice President
Krishna Mikkilineni Senior Vice President-Engineering & Operations
Jaime Chico Pardo Lead Independent Director
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