Honeywell was in the news recently after lowering its upper end sales and profit forecast range, due to a slowdown in its aerospace and aviation division. Honeywell said sales would fall 3 percent in the third quarter, compared to the crowd's expectations of a 2 percent increase. For the year, profits are now expected to fall in the range of $6.60 to $6.64 a share, down from its previous forecast of $6.60 to $6.70, with sales down 1 to 2 percent from a year earlier. Shares were up double digits prior to the announcement but have since dropped by about 6 percent.
Of Honeywell's major reporting segments, performance materials and technologies continue to fare the worst. In the second quarter sales from the segment declined 3 percent from a weaker backlog of universal oil product processing, licensing and equipment sales. Honeywell insists that the sector will improve in the third quarter but not enough to offset the weakness in the aerospace division.
In its earlier report, Honeywell's upper brass cited a slowdown in its jet and general aviation business resulting from a decline in the oil and gas industry. Sales for the segment have edged down between -1 to 1 percent, right in line with the second quarter but lower than earlier projections.
One facet of the company that has performed well is automation and control solutions. The segment grew 9 percent in the second quarter on continued global growth, strength in its domestic business and further penetration of high growth regions. Some of this includes the creation of a new division based on Internet of Things. Embracing digital technology is a no-brainer, even in the industrial sector. That will help offset some of the losses in its other segments.