Honeywell International ended its fiscal year on a high note, reporting a 10% increase in 2007 sales and a 25% increase in its earnings per share late last week.
For the full year, the company generated $34.6 billion in revenue and earnings per share of $3.16 — a healthy increase over 2006, when the automation and controls company reported sales of $31.4 billion and EPS of $2.52. Net income for the year reached $2.44 billion, up from $2.08 billion in 2006.
Honeywell's fourth quarter featured similar double-digit growth. The company reported sales of $9.3 billion in the quarter, a 12% increase over the $8.3 billion reported in the same period last year. The bottom line showed even greater gains, with earnings per share up 26% year-over-year to $0.91, and net income up nearly 18% to $689 million from $585 million.
All of the company's four business units reported strong sales in the quarter. Sales for the year, however, were led by the Aerospace and Automation and Control Solutions (ACS) units, which grew sales by 10% and 13%, respectively.
ACS' products business performed well, up 11% for the year, the company said. In particular, Honeywell benefited from strong customer demand for ACS' solutions; that business grew 20% in the quarter and 17% for the year.
Honeywell is also leveraging the 12 acquisitions it made in 2007. Two of those closed in the fourth quarter — Hand Held Products and Maxon Corp. — and were added to the ACS portfolio.
Honeywell officials said the company's acquisition strategy has worked well. "We don't overpay and we integrate them [into the existing business] very well," said Honeywell Chairman and CEO Dave Cote in a briefing with financial analysts on Friday.
But acquisitions alone do not account for Honeywell's 2007 success. Cote also credited strong positioning in profitable industries and progress on process improvement.
Within ACS specifically, innovation has been the key theme. "Over 300 new products were introduced in 2007, and there's been increased penetration in emerging regions of Asia and the Middle East, which is driving growth across all of the ACS business," said Honeywell CFO Dave Anderson on the conference call. "We are focused on successfully integrating recent acquisitions and we look for further accretive acquisition opportunities in this segment," he said.
Cote and Anderson asserted that despite warnings of a possible recession, Honeywell's business has not stalled. As a result, the company is forecasting an EPS increase of 21% to 26% for the first quarter of 2008.
"Even against the acknowledged backdrop of a more difficult economic environment in 2008, we expect a strong start in the first quarter," Anderson said.