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Honeywell to Enhance Operational Efficiency of Sappi Plant

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Honeywell International Inc. (HON - Free Report) recently announced that Sappi Austria Produktions-GmbH & Co. KG will be using its technology for upgrading Sappi’s paper mill based in Gratkorn, Austria. The mill, which is one of the oldest paper mills in Europe will use Honeywell’s technology to modernize itself under a Sappi’s project worth €30 million.

Notably, the mill is engaged in producing 980,000 tons of top-quality, multicoated paper each year for publications globally. Per the deal, Honeywell will implement several upgrades like process visualization, server virtualization and cybersecurity solutions. As a matter of fact, the added virtualization capabilities will help in improving the mill’s operational efficiency apart from reducing maintenance costs.

Under the new project, Honeywell will have the responsibility to integrate an Experion Virtualized Solution platform that will enable centralized monitoring of the operations in the mill. Also, the company will work on integrating four Experion PMD automation systems, machinery and drives, apart from four Experion MX Quality Control Systems. Other solutions including two ProCoat CD actuator systems, Uniformance PHD historian and Process Studio solutions are also noteworthy.

Honeywell has secured the deal on the basis of its reputed technological expertise and experience of working with the site. Notably, the company worked on upgrading the site's flagship PM11 paper machine to Experion PMD automation system in 2015.

Existing Business Scenario

Strength in commercial aviation and solid demand in its connected building technologies are likely to drive Honeywell’s revenues in the quarters ahead. Increased technology spending of the global commercial aviation industry and sturdier demand for state-of-the-art technology solutions are expected to bolster its revenues. The company currently anticipates generating organic sales growth of 5-6% in 2018.

Going forward, the company expects that greater operational excellence, stock buybacks and corporate tax benefits will continue to drive its profitability. Also, Honeywell raised its full-year earnings view to the $8.10-$8.20 per share range, from the previous projection of $8.05-$8.15.

The Zacks Rank #3 (Hold) stock has yielded a return of 11.4% compared with the industry’s growth of 7.1% in the past three months.

However, of late, the company has been facing inflationary headwinds across its entire supply-chain process. It experienced inflation in a number of areas, especially logistics, transportation and in certain material prices like metals during the second quarter. Escalating costs might dent its profitability in the upcoming quarters.

Key Picks

Some better-ranked stocks in the same space are Macquarie Infrastructure Company (MIC - Free Report) , Danaher Corporation (DHR - Free Report) and Aetna Inc. (AET - Free Report) . While Macquarie Infrastructure sports a Zacks Rank #1 (Strong Buy), Danaher and Aetna carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Macquarie Infrastructure surpassed estimates twice in the trailing four quarters with an average positive earnings surprise of 8.05%.

Danaher outpaced estimates in each of the preceding four quarters with an average earnings surprise of 4.95%.

Aetna exceeded estimates in each of the trailing four quarters with an average earnings surprise of 11.00%.

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