"We should all be cautious about the year ahead of us, particularly the first half," Chief Executive Dave Cote told investors on a conference call on Friday. "We are, as usual, planning conservatively in 2010, with modest organic sales growth."
Honeywell, which also makes thermostats and other systems for managing large buildings, expects first-quarter profit of 35 cents to 40 cents per share on revenue of $7.2 billion to $7.6 billion. Analysts, on average, had looked for profit of 47 cents per share on $7.63 billion in revenue, according to Thomson Reuters I/B/E/S. The Morris Township, New Jersey-based company stood by its full-year profit forecast, saying that the low first-quarter figure reflected seasonal patterns.
The US economy is showing signs of recovering from its worst downturn since the Great Depression. Government data on Friday showed a 5.7 percent rise in fourth-quarter gross domestic product. But many on Wall Street remain wary and this week have punished companies whose outlooks disappointed. For instance, shares of Caterpillar Inc and Textron Inc sold off earlier in the week after their full-year profit forecasts came in short of investors' expectations.
The company reiterated its 2010 profit forecast of $2.20 to $2.40 per share, including 80 cents of non-cash charges related to pension accounting. "People are sort of scratching their heads and saying, 'This is all back-end loaded, so we have to step back until we get clarity,'" said Peter Klein, senior portfolio manager at Fifth Third Asset Management in Cleveland. "Management is being conservative, like Caterpillar was when it announced." Honeywell shares fell 4 percent to $38.23 on the New York Stock Exchange.