Honeywell CEO Tries to Explain Surprise Shortfall

By Ted Mann 

Honeywell International Inc. said an unexpectedly weak September was to blame for an anticipated drop in its annual sales, which confused and spooked investors in the aerospace and building systems conglomerate.

Chief Executive Dave Cote told investors Friday morning that sales in areas such as aftermarket services for business jet engines and hand-held scanners for shippers and logistics companies "failed to materialize" in the third quarter, requiring the company to cut its targets for earnings and annual sales.

"We expected short cycle orders that normally materialize," Mr. Cote said. "They usually do, but in this case, they didn't."

The announcement, which triggered a sharp selloff in Honeywell shares, was "uncomfortable," Mr. Cote said on a conference call. The stock was down 8% to $106.37 in morning trading in New York.

Still, he said, the company remains confident in its direction for the long term.

"This is the bottom" for Honeywell businesses exposed to the oil and gas industries, Mr. Cote said, even as he cautioned troubles in the business jet industry "will get worse" next year.

Sales related to business jets were hurt by a variety of factors, executives said, including slowing growth in emerging regions including the Middle East, Russia and China, where Chief Financial Officer Tom Szlosek said an anticorruption campaign has blunted the market for luxury goods such as private aircraft.

Write to Ted Mann at [e-mail]

(END) Dow Jones Newswires

October 07, 2016 10:10 ET (14:10 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.