Honeywell profit meets estimates, trims forecast

A Pilot holds the commands of a Gulfstream G450 aircraft, equiped with the Enhanced Ground Proximity Warning System (EGPWS) and the Synthetic Vision display of Honeywell during a demonstration flight at the 8th Annual European Business Aviation Convention & Exhibition (EBACE) which takes place in Geneva May 20, 2008.

BOSTON (Reuters) - Honeywell International Inc reported a 38 percent drop in earnings and cut its full-year profit forecast, saying that the recession was matching up to the worst of its expectations.

The world's largest maker of cockpit electronics said demand for business jet components and automotive turbochargers fell sharply, as a severe global recession took a heavy toll on corporate spending and demand for diesel cars in Europe.

Even its aviation maintenance business -- sales of spare parts, which tend to fall off less sharply in downturns -- was hard hit as airlines pulled parts off idled aircraft rather than buy new spare parts, executives said.

Honeywell cut its 2009 profit forecast to the low end of its most recent view, bringing the outlook more in line with Wall Street's expectations, saying it expects no economic turnaround this year.

It said it would continue to look for ways to cut costs.

"While the top line environment continues to be very challenging especially in business jets, and turbos, we're able to deliver these results because of the strong cost actions and controls that we have in place," said Chief Executive Dave Cote, on a conference call with analysts and investors.

Honeywell expects full-year earnings of $2.85 per share, at the low end of its prior forecast of $2.85 to $3.20. For the year, Wall Street had looked for profit of $2.83 per share.

The company forecast third-quarter profit of 70 cents to 75 cents per share, below the 79 cent Reuters Estimate.

The Morris Township, New Jersey-based company cut its third-quarter forecast below Wall Street's view, meaning it would need a strong fourth quarter to hit its full-year target.

"The back-end loaded nature of the guidance ... continues to suggest that even the low-end of the prior range is a stretch," wrote JP Morgan analyst Stephen Tusa, in a note to clients.

Honeywell cut its revenue forecast to $31.5 billion, below its prior range of $32.3 billion to $33.2 billion.

BY THE NUMBERS

Honeywell, which also makes systems to manage the temperature and security of large buildings, said second-quarter income came to $450 million, or 60 cents per diluted share, compared with $723 million, or 96 cents per diluted share, a year earlier.

Revenue fell 22 percent to $7.57 billion.

Analysts, on average, had looked for earnings of 60 cents per share on revenue of $7.68 billion, according to Reuters Estimates.

Honeywell shares were up 12 cents, or 0.4 percent, to $34.11 in early trading on the New York Stock Exchange.

As of Friday's close, Honeywell shares were up 3.5 percent for the year, while the Standard & Poor's capital goods industry group was down 3.4 percent.

Its competitors include United Technologies Corp in aerospace and building control systems, Goodrich Corp in aviation and DuPont Co in specialty materials.

(Reporting by Scott Malone; Editing by Derek Caney and Gerald E. McCormick)