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28 Jan 11. Honeywell announced full-year 2010 sales increased 8% to $33.4bn vs. $30.9bn in 2009. Earnings per share (proforma) were up 12% to $3.00 versus $2.69 in the prior year, excluding the unfavorable impact of the pension mark-to-market adjustment. Reported earnings per share for 2010 were $2.59 versus $2.05 in the prior year. Free cash flow (cash flow from operations less capital expenditures) was a record $3.6bn (cash flow from operations of $4.2bn). Fourth quarter sales increased 12% to $9.0bn versus $8.1bn in 2009. Earnings per share (proforma) were $0.87 versus $0.83 in the prior year fourth quarter, excluding the unfavorable impact of the pension mark-to-market adjustment ($0.40 per share in 2010 and $0.63 per share in 2009). Reported earnings in the fourth quarter were $0.47 per share versus $0.20 in the prior year. Free cash flow was $0.7bn (cash flow from operations was $1.0bn), including a $600m cash contribution to U.S. pension in the fourth quarter. The company separately announced the sale of its Consumer Products Group (CPG) business to Rank Group, a private investment company, in a cash transaction valued at approximately $950m. Currently reported within Honeywell’s Transportation Systems segment, CPG had 2010 sales of approximately $1bn. The company’s 2011 EPS guidance excludes the anticipated book gain on the sale of CPG, which it expects to utilize for repositioning and other actions. The benefits of these actions, together with the deployment of divestiture proceeds, are expected to more than offset lost CPG earnings beyond 2011. Upon regulatory approval, the company expects to account for CPG as Discontinued Operations.
“We are pleased to announce the sale of CPG – while CPG is a good business, it doesn’t fit with our portfolio of differentiated, global technologies,” said Honeywell Chairman and Chief Executive Officer Dave Cote. “We’re also very pleased with our strong fourth quarter results, capping a terrific year for Honeywell. The year saw progressively improved market conditions, with great execution across our businesses resulting in robust sales growth and record segment margins and cash flow. Our seed planting investments contributed meaningfully to our growth and productivity in 2010, with significant global customer wins, a robust new product pipeline, and traction on our key process initiatives. Our orders are trending higher across our businesses, and with the continued improvement we’re seeing in the global economy, we’re confident in our outlook for higher revenues, and 20% plus earnings growth in 2011.”
Honeywell raised its 2011 earnings guidance to $3.60-3.80 per share, up from $3.50-3.70 per share, excluding any mark-to-market pension adjustment. The company also reaffirmed its previously-stated 2011 sales guidance of $35.0-36.0bn (excluding the impact of the anticipated Discontinued Operations accounting treatment of CPG) and free cash flow guidance of $3.5-3.7bn, before any U.S. pension contributions (cash flow from operations of $3.3-3.5bn, including $1bn pension contribution).
Fourth Quarter Segment Highlights
Aerospace
*Sales were up 6% compared with the fourth quarter of 2009 due to higher Commercial OEM and aftermarket volumes, as well as higher military and government services sales, partially offset by pre-production payments made to Business and General Aviation (BGA) OEM customers.
*Segment profit was up 5%, and segment margin in the quarter decreased 20 bps to 18.4%. The segment margin decline was primarily due to the absence in 2010 of prior year labour cost actions and BGA OEM payments mentioned above, partially offset by increased volume and benefits from prior period repositioning actions. Full-year 2010 segment margin was 17.2%, down 40 bps compared to 2009.
Transportation Systems
*Sales were up 18% compared with the fourth quarter of 2009, primarily due to higher Turbo volumes globally, robust new platform launches, higher European diesel penetra

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