Honeywell profit beats on higher demand for aircraft parts

[July 20, 2018]  By Ankit Ajmera

(Reuters) - Honeywell <HON.N> on Friday reported a higher-than-expected quarterly profit as it sold more aircraft parts and services to business jet and commercial airline customers, prompting the company to raise its 2018 earnings forecast for the third time.

A worker is seen building an aircraft engine at Honeywell Aerospace in Phoenix, Arizona, U.S. on September 6, 2016. REUTERS/Alwyn Scott/File Photo

Shares of Honeywell, which makes engines for business jets produced by Bombardier <BBDb.TO> and Textron <TXT.N>, were up 1.4 percent in premarket trading.

"Our long-cycle orders and backlog grew 11 and 14 percent respectively, which positions us well for the rest of 2018 and into 2019," Chief Executive Officer Darius Adamczyk said.

Honeywell is benefiting from a rise in global travel amid expanding economic growth, while also seeing robust demand from the defense industry.

Sales in the aerospace division, which makes auxiliary power units, braking systems and other parts for Boeing and Airbus single-aisle planes, rose about 10 percent to $4.06 billion in the second quarter, while margins expanded by 30 basis points to 22.6 percent.

An ecommerce boom in the United States is also contributing to the Morris Plains, New Jersey-based company's profits, helping it sell more supply chain and warehouse automation equipment and software.

Sales in Honeywell's safety and productivity solutions unit, which also makes personal protection equipment and footwear designed for work, increased about 13 percent to $1.62 billion, while margins rose by 150 basis points to 16.5 percent.

Honeywell raised its 2018 forecast for profit to $8.05-$8.15 per share from $7.85-$8.05, and sales to $43.1 billion-$43.6 billion from $42.7 billion-$43.5 billion.

Excluding items, Honeywell earned $2.12 per share in the quarter ended June 30, beating analysts' average estimate of $2.01, according to Thomson Reuters I/B/E/S.

The company's revenue rose 8.3 percent to $10.92 billion, above Wall Street estimate of $10.80 billion.

Up to Thursday's close, Honeywell's stock had fallen 3.8 percent this year, outperforming a 10.1 percent decline in the Dow Jones U.S. General Industrials index <.DJUSGI>.

(Reporting by Ankit Ajmera in Bengaluru; Editing by Maju Samuel)

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