Honeywell issued a second-quarter revenue forecast below Wall Street estimates, citing disruptions linked to the Middle East conflict. Shares of the Charlotte, North Carolina-based company declined following the announcement.
The ongoing conflict has exacerbated inflationary pressures on U.S. manufacturing, increasing costs and disrupting logistics chains. Honeywell previously warned of potential delays in revenue recognition due to Middle East shipments.
The company now anticipates second-quarter sales between $9.4 billion and $9.6 billion, falling short of the $9.73 billion consensus estimate. The Middle East conflict specifically impacted Honeywell's Process Automation and Technology segment, causing a decline in aftermarket activity and extended delivery timelines.
Despite these challenges, pricing gains and cost reductions associated with the planned spin-off of its Aerospace business helped offset inflationary pressures. For the first quarter ended March 31, total sales increased 2% year-over-year to $9.14 billion, though this was below analyst estimates of $9.31 billion.
Honeywell is progressing with its plan to separate into three independent companies focused on automation, aerospace, and advanced materials. The company also announced the sale of its Warehouse and Workflow Solutions business.
The spin-off of Honeywell Aerospace is now expected by June 29, 2026. Higher costs related to the spin-off and litigation expenses contributed to a significant decrease in free cash flow for the quarter. Quarterly profit also declined due to restructuring costs, although adjusted profit surpassed estimates.