Honeywell posts in-line profit, keeps outlook

BOSTON (Reuters) - HONEYWELL (HON.NY)International Inc reported a 2.6 percent rise in profit that met Wall Street forecasts, and the diversified U.S. manufacturer held its outlook steady as it braces for a "more challenging" year.

The rise in profit reported came despite a 6.1 percent decline in sales, reflecting the company's sharp focus on cost-cutting over the past few years.

Shares of world's largest maker of cockpit electronics rose 1 on Friday, while U.S. stocks were generally down on grim economic data.

"We believe (Honeywell) is still underappreciated for the substantial restructuring actions that were taken in 2007 and 2008," said Citigroup analyst Jeffrey Sprague, in a note to clients.

Honeywell said on Friday that fourth-quarter net income rose to $707 million, or 97 cents per diluted share, from $689 million, or 91 cents per share, a year earlier.

The result matched analysts' forecasts, according to Reuters Estimates.

Revenue fell to $8.7 billion from $9.3 billion.

"We've been taking the right proactive restructuring actions to prepare ourselves," said Chief Executive Dave Cote, on a conference call with analysts. "I feel confident in our outlook for '09 despite some very tough economic conditions."

HOLDS '09 FORECAST STEADY

The company, which also makes thermostats and other equipment to manage large buildings, held its 2009 forecast steady, looking for earnings of $3.20 to $3.55 per share.

It expects first-quarter profit of 50 cents to 60 cents per share on revenue of $7.4 billion to $8 billion, a forecast that was below Wall Street's expectations.

Honeywell is counting on continued modest revenue growth of 5 to 10 percent in developing markets to offset declines in the United States and Europe, its chief financial officer said in an interview.

"What we are experiencing, obviously is a much slower GDP growth, but still growth in China and India, but the expectation is that we'll grow at or faster than those served markets," said CFO Dave Anderson. "Part of that is that we're dealing with relatively small bases.

Its shares were up 32 cents at $32.99 on the New York Stock Exchange.

The Morris Township, New Jersey-based company's shares have fallen about 44 percent over the past year, a slightly more modest decline than the 46 percent decline of the Standard & Poor's capital goods industry group .

Honeywell's competitors include United Technologies Corp in aerospace and building control systems, Goodrich Corp in aviation and DuPont Co in specialty materials.

(Reporting by Scott Malone; Editing by Lisa Von Ahn)