Honeywell Tops Profit Target But Lowers Outlook

Honeywell International third-quarter profit rose a better-than-expected 16.3 percent on strong sales of thermostats and other equipment used to manage large commercial buildings.

But in a sign of how quickly business conditions have deteriorated in the past few weeks, the diversified U.S. manufacturer cut its fourth-quarter profit forecast on Friday and its shares fell.

The world's largest maker of cockpit electronics has taken steps including putting a hiring freeze in place as it braces for an economic downturn.

"As we enter this period of difficult economic times, we are well prepared and ready to execute in this difficult economic environment,'' said Chief Executive Dave Cote, on a conference call with analysts.

The company is preparing for "recessionary conditions'' in the United States and Europe next year and sees growth slowing in emerging markets next year, said Chief Financial Officer Dave Anderson.

Honeywell now expects to earn 97 cents to $1.01 per share on revenue of $9.4 billion in the fourth quarter.

Analysts, on average, had looked for profit of $1.04 per share on sales of $9.8 billion, according to Reuters Estimates.

"Fundamentals are deteriorating faster than expected,'' wrote J.P. Morgan analyst Stephen Tusa, in a note to clients.

Third-quarter profit increased to $719 million, or 97 cents per share, from $618 million, or 81 cents per share, a year earlier. That topped the average Wall Street estimate by 2 cents, according to Reuters Estimates.

Revenue rose 6.2 percent to $9.28 billion.

The Morris Township, New Jersey-based company has benefited from strong global investment in noncommercial construction.

Correction: An earlier version of this story put the latest consensus estimate for 2008 earnings at $3.81 per share instead of $3.80.

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