US' Honeywell beats guidance with strong Q1, projects stable outlook

The operating margin of the company contracted 30 basis points (bps) to 20.1 per cent and segment margin was flat at 23 per cent, exceeding previous guidance. Meanwhile, the operating income increased 6 per cent and segment profit increased 8 per cent to $2.3 billion, driven by contribution from acquisitions and a continued focus on commercial excellence, Honeywell said in a press release.

The earnings per share (EPS) for Q1 was $2.22, flat YoY and adjusted EPS was $2.51, up 7 per cent YoY. Operating cash flow was $0.6 billion and free cash flow was $0.3 billion, up 61 per cent YoY.

Segment-wise, Aerospace Technologies sales for Q1 increased 9 per cent YoY organically, driven by continued strong performance in commercial aftermarket and defence and space. Commercial aftermarket sales grew 15 per cent, led by increased demand in air transport and better output from supply chain improvements.

Defence and space sales increased 10 per cent on an organic basis, aided by ongoing geopolitical uncertainty. Segment margin contracted 190 bps to 26.3 per cent on account of expected mix pressure and the impact of acquisitions, partially offset by productivity actions, added the release.

“Honeywell started the year off exceptionally well, exceeding guidance across all metrics, led by solid organic growth,” said Vimal Kapur, chairman and chief executive officer (CEO) of Honeywell. “For the third straight quarter, we delivered both sequential and year-over-year backlog growth, driven by healthy order rates and continuing customer demand for our differentiated offerings.”

“Despite the volatile macroeconomic backdrop, we maintained segment margin consistent with last year, which is a testament to the value delivered by our Accelerator operating system. Though we have not yet seen it in our results, we recognise we face an uncertain global demand environment for the remainder of 2025, and our company will work tirelessly, leveraging all tools available to us, to deliver for customers and shareholders,” added Kapur.

For full year 2025, Honeywell expects its sales to be in the range of $39.6-$40.5 billion with organic sales growth in the range of 2 to 5 per cent. Segment margin is expected to be in the range of 23.2 to 23.5 per cent, with segment margin expansion of 60 to 90 bps YoY. The adjusted EPS is now expected to be in the range of $10.20- $10.50, up 5 cents at the midpoint from the prior guidance range.

The company’s operating cash flow is still expected to be in the range of $6.7 billion to $7.1 billion and free cash flow is projected to range from $5.4 billion to $5.8 billion.

ALCHEMPro News Desk (SG)