Honeywell International Inc is counting on the payoff from cost cutting to boost its fourth-quarter results and allow it to hit its lowered 2009 profit target, the diversified U.S. manufacturer's chief financial officer said on Monday.
The world's largest maker of cockpit electronics is looking for its streak of sharp quarterly profit drops to end in the fourth quarter. That left some analysts worried Honeywell was too optimistic about the fourth quarter, but its CFO said the company is not counting on an economic rebound.
It's really the cumulative impact or benefit of all the cost actions weighted, not exclusively to the fourth quarter, but weighted to the back half of the year, CFO Dave Anderson said in a phone interview.
Honeywell cut about 1,500 jobs -- a relatively small slice of its worldwide staff of about 128,000 worldwide -- in the second quarter, and expects to complete the bulk of its planned restructuring by the fourth quarter, Anderson said.
The Morris Township, New Jersey-based company did not make a specific fourth-quarter profit forecast, but its third-quarter and full-year forecasts imply fourth-quarter earnings of 96 cents to $1.01 per share, roughly flat with the prior-year result.
Analysts, on average, expect Honeywell to report fourth-quarter earnings of 91 cents per share, according to Reuters Estimates.
Its second-quarter report showed a 38 percent drop in profit and the company expects a more modest, but still double-digit-percentage third-quarter drop.
Analysts variously described that fourth-quarter target as a stretch and a hockey stick in research reports.
But Michael Brell, senior research analyst at Frost Investment Advisors, in San Antonio, Texas, which owns Honeywell shares, said he was confident in the outlook.
The one thing that Honeywell can control is their cost structure and they've done a pretty solid job in taking out costs, Brell said. We do have some concern about the timeline of the recovery in their businesses because it's a mix of early and late cycle ... but eventually we think revenues will catch up.