WASHINGTON - Second quarter earnings rose 18 percent at Honeywell International Inc. and the diversified manufacturer raised its 2008 forecast Friday as its global reach helped buffer the company from the deep woes faced by the U.S. economy.
Morristown, N.J.-based Honeywell earned $723 million, or 96 cents per share, beating Wall Street forecasts for the quarter ending June 30. It earned $611 million, or 78 cents per share, a year ago. Sales rose 13 percent to $9.67 billion from $8.54 billion a year ago.
Analysts polled by Thomson Financial were expecting earnings of 94 cents per share on $9 billion in revenue.
Company officials said they benefited from healthier overseas conditions, such as markets in Asia, that helped drive up profits in its aerospace and building control systems divisions. Seventy percent of the revenue growth in the quarter came from outside the United States, a trend that was helped by favorable currency exchange rates.
"We continue to benefit from our strong and increasing global presence, especially in emerging regions," said Dave Cote, Honeywell's CEO.
Honeywell also boosted its forecast for 2008 by 5 cents per share to a range of $3.75 to $3.85 per share. Cote said he expects the company to post double-digit earnings growth in the second half of the year, and the company forecast 95 cents per share - a 17 percent earnings increase - in the third quarter.
In a research note, Citigroup analyst Jeffrey Sprague agreed that Honeywell would likely remain strong despite a sinking economy, saying it "is in a position to grow EPS (earnings per share) in the high teens in an environment where macro EPS growth is under pressure."
Honeywell, which makes airplane and aviation equipment, building controls such as fire prevention equipment and specialty chemical materials, has largely avoided much of the macroeconomic problems faced recently by large manufacturers. Along with overseas sales, the company has said higher energy prices have actually helped with sales of building temperature control equipment as customers look for ways to save energy.
The company has also trimmed some of its businesses, selling part of its aerospace production unit to B/E Aerospace Inc. for $1.05 billion in the quarter. Analysts have said such restructuring has helped Honeywell save money.
Sales in the aerospace division, which makes avionics tools, engines and other equipment, rose 8 percent. Domestic airlines have been battered by high fuel prices and global flight hours are expected to decline in the rest of the year. But Honeywell said more sustained growth in aviation outside the United States and the company's aftermarket work, including a recent deal to maintain Southwest Airlines' fleet of Boeing 737s, should help it weather the downturn.
The automation and control solutions unit, rose 19 percent, with much of the increase from growth from restructuring and currency exchange effects.
Honeywell shares dipped 16 cents to $50.70 in midday trading.