WASHINGTON --
Honeywell International Inc. said Friday third-quarter earnings rose 16 percent on higher sales in its building controls division but trimmed its 2008 forecast as it prepares for a likely recession and slow growth in foreign markets.
The Morristown, N.J.-based company narrowed its profit forecast for 2008, dropping the top end of its outlook by five cents while raising the low end by a penny. Honeywell now expects earnings to range $3.76 to $3.80 per share on sales of $37.2 billion, short of analysts predictions.
Shares of Honeywell, which makes products such as airplane and fire safety equipment, fell $2.58, or 8.3 percent, to $28.35 in morning trade on Friday.
The company outlook reflects concern that the United States and Europe would be in recessions next year, and that once booming markets such as India and China would slow. The continued decline in home building and forecasts of less flying next year could weigh on the company's largest units, building controls and aerospace.
And the once favorable impact of foreign exchange rates, which benefited Honeywell's overseas sales that account for more than 50 percent of its total, has diminished as the dollar strengthens.
Still, officials said they have spent the past several years positioning Honeywell for a downturn, diversifying into markets such as defense that could provide longer term stability. Honeywell has had no problems with commercial paper during the current credit freeze and can tap $3.8 billion in committed credit facilities if needed.
"While we are surprised by the extent of these tough times ... I can't say we are surprised they came," said Dave Cote, Honeywell's chief executive. "We have been preparing for that."
Honeywell reported net income of $719 million, or 97 cents per share, up from $618 million, or 81 cents per share, a year earlier. Revenue grew 6 percent to $9.3 billion.
Honeywell's aerospace division, which supplies aircraft services from radars to plane engines, had revenue that remained roughly flat at $3.1 billion. The specialty materials unit, maker of polymers and other chemical products, saw sales rise 9 percent to $1.3 billion, while sales in the transportation systems division dipped 6 percent to $1.2 billion.
The company's building controls unit, which makes products ranging from programmable thermostats to fire safety tools, posted the highest revenue gain, up 15 percent to $3.6 billion on the effects of favorable foreign exchange rates and acquisitions and divestitures.
The third quarter also included a $600 million gain from the completion of the sale of Honeywell's consumable solutions division, but the company also said it spent the same amount on repositioning, environmental moves and other actions.
