April 23 (Reuters) – Honeywell on Thursday forecast second-quarter revenue below Wall Street estimates as disruptions caused by the U.S.-Israel war on Iran weighed on the industrial giant’s business.
Shares of the Charlotte, North Carolina-based industrial conglomerate fell 7.6% in premarket trading.
The ongoing conflict in the Middle East has intensified inflationary pressures across U.S. manufacturing, driving up raw material and energy costs while disrupting logistics.
Last month, Honeywell warned that delays in Middle East shipments could defer some first-quarter revenue into later periods, even as demand remained stable.
The company now expects second-quarter sales to range between $9.4 billion and $9.6 billion, below the $9.73 billion consensus estimate compiled by LSEG.
The Middle East conflict affected Honeywell’s Process Automation and Technology segment, with aftermarket activity declining and some delivery timelines extended.
However, the company said pricing gains and an accelerated removal of stranded costs tied to the planned spin-off of its Aerospace business more than offset inflationary pressures.
For the quarter ended March 31, total sales grew 2% from a year ago to $9.14 billion, but came below analysts’ estimates of $9.31 billion.
The company is gearing up for the breakup of its large conglomerate structure into three independent companies focused on automation, aerospace and advanced materials and has executed several divestitures to streamline operations ahead of the separation.
On Thursday, Honeywell announced the sale of its Warehouse and Workflow Solutions (WWS) business to American Industrial Partners in an all-cash transaction.
It now expects the spin-off of Honeywell Aerospace to be completed on June 29, 2026.
Higher costs in relation to the spin-off along with Flexjet litigation expenses led to a 71% decline in free cash flow during the quarter to $56 million.
Quarterly profit also fell 35% on higher restructuring costs to $1.29 per share. On an adjusted basis, profit rose 11% to $2.45 per share and beat estimates of $2.32.
(Reporting by Aatreyee Dasgupta and Allison Lampert; Editing by Tasim Zahid)
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