Honeywell Lifts Outlook As Transformation Picks Up Speed
Honeywell International Inc. (NASDAQ:HON) on Thursday reported second-quarter 2025 results that beat Wall Street expectations and raised its full-year earnings and sales outlook as it continues a sweeping portfolio transformation.
The company posted adjusted earnings of $2.75 per share, topping analysts’ estimates of $2.65. Revenue for the quarter rose 8% year over year to $10.35 billion, beating expectations of $10.02 billion.
Net income on a GAAP basis was $2.45 per share, up 4% from the prior-year period.
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Operating income rose 7% and segment profit increased 8% to $2.4 billion, led by strength in Building Automation and Defense and Space. Operating margin contracted 30 basis points to 20.4% and segment margin contracted 10 basis points to 22.9%.
Operating cash flow was $1.3 billion, down 4% year over year, and free cash flow was $1.0 billion, down 9% year over year.
Segment results were mixed. Aerospace Technologies generated $4.31 billion in sales, up 6% organically, though segment margins declined 170 basis points due to cost inflation and recent acquisitions.
Building Automation posted $1.83 billion in sales with 8% organic growth and a 90 basis-point margin expansion.
Industrial Automation reported $2.38 billion in sales, flat on an organic basis, as gains in sensing and smart energy were offset by declines in warehouse automation and productivity solutions.
Energy and Sustainability Solutions recorded $1.84 billion in sales, up 6% organically, though segment margins contracted due to cost inflation and a customer settlement.
The quarter also marked continued execution on Honeywell’s portfolio restructuring. The company closed its $2.2 billion acquisition of Sundyne, announced the £1.8 billion acquisition of Johnson Matthey’s Catalyst Technologies business, and completed the $1.3 billion sale of its personal protective equipment unit. It also initiated a strategic review of its Productivity Solutions and Services and Warehouse and Workflow Solutions segments.
In February, Honeywell announced it would separate its Automation and Aerospace businesses. The Solstice Advanced Materials spin-off remains on track for the fourth quarter of 2025, with the full restructuring expected to be completed in the second half of 2026.
“With the announcement of our review of strategic alternatives for our Productivity Solutions and Services and Warehouse and Workflow Solutions businesses, this month also marked the conclusion of the in-depth portfolio review that I initiated early in my tenure as CEO to simplify and optimize Honeywell’s businesses. As we prepare to separate into three industry-leading public companies, we are confident that our efforts to shape our portfolio have positioned Honeywell to deliver significant value for customers, employees, and shareholders,” commented Vimal Kapur, chairman and chief executive officer of Honeywell.
Outlook 2025
Honeywell raised its full-year 2025 adjusted earnings guidance to $10.45 to $10.65 per share, up from its prior forecast of $10.20 to $10.50, versus the consensus of $10.40.
The company also increased its full-year sales outlook to $40.8 billion and $41.3 billion, up from $39.6 billion to $40.5 billion, versus a consensus of $40.27 billion.
Honeywell expects operating cash flow to be between $6.7 billion and $7.1 billion, and free cash flow between $5.4 billion and $5.8 billion. Excluding the Bombardier settlement, it forecasts 3% to 4% organic sales growth, slightly lower segment margins, and adjusted EPS growth of 1% to 3%.
For the third quarter, Honeywell expects adjusted earnings of $2.50 to $2.60 per share, compared with the analysts’ estimate of $2.54. GAAP earnings are projected to range from $2.30 to $2.40 per share.
Sales are expected to be between $10 billion and $10.3 billion, versus the consensus of $10.02 billion. The updated forecast includes contributions from the Sundyne acquisition and the sale of its personal protective equipment business.
Price Action: At last check Thursday, HON shares were trading lower by 3.04% to $232 premarket.
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