Honeywell slashes 6,500 jobs

Honeywell has been hit financially by the pending merger

Honeywell International, which manufactures goods ranging from aircraft electronics to security systems, is to cut 6,500 jobs, about 5% of its workforce.

Honeywell has not been immune to the current economic downturn

Michael Bonsignore

The news came as the firm announced that profits in the first three months of the year had nose-dived 91% to $41m (£28.4m) compared to $506m in the same period the previous year.

The firm blamed the combination of harsh economic conditions and high energy and raw material costs.

Honeywell has been hanging in limbo while waiting to be taken over by the world's largest company General Electric (GE).

In sharp contrast, GE reported a surge in profits of 16% earlier this month.

Missed estimates

"Honeywell has not been immune to the current economic downturn," said the firm's chairman Michael Bonsignore.

All four of Honeywell's major businesses reported declining profits during the last three months.

Honeywell results snapshot (Q1)

Profits $41m

Sales $5.94bn

Cost cutting charge $595m

6,500 job cuts

A large chunk of profits was eaten up by cost-cutting charges because of the economic downturn.

But even excluding the cost-cutting measures, Honeywell missed Wall Street's estimates.

When GE's bid emerged last autumn, Honeywell announced that just 550 jobs would go at its corporate headquarters.

Waiting for clearance

The pending merger with GE has also hit Honeywell financially as it has delayed selling underperforming business units that it had previously planned to ditch.

The EU launched a full investigation into the planned merger of GE and Honeywell, and is expected to announce its decision in July.

Both companies say they are confident of winning approval from both the EU and US regulatory authorities.

GE agreed to pay $45bn in stock for Honeywell in what is thought to be the largest industrial takeover yet.

Honeywell's share price was down 1.22% to $47 in morning trade in New York, giving the firm a share by market value of $37.5bn.