* Raises low end of 2017 EPS forecast
* Lifts 2017 organic sales forecast to 2-4 pct from 1-3 pct
* Q2 EPS $1.80 vs est $1.78
* Q2 revenue $10.08 bln vs est $9.89 bln (Adds details, background, shares)
July 21 (Reuters) - Honeywell International Inc reported a better-than-expected quarterly profit, as sales in its aerospace unit and the business that caters to the energy industry were not as bad as it had feared.
Sales in Honeywell's aerospace business, its biggest, fell about 3 percent to $3.67 billion in the second quarter ended June 30, smaller than the company's forecast of a decline of 5 to 7 percent.
Margins in the unit rose to 22.3 percent from 20.9 percent, Honeywell, which makes products ranging from aircraft engines to handheld barcode scanners, said.
The unit, which makes jet engines and provides spare parts, repair, overhaul and maintenance services, benefited from strength in its commercial aviation after-sales business and growth in U.S. defense volumes, Honeywell said.
Honeywell is reviewing whether to separate its aerospace business, a move hedge fund Third Point LLC wants the U.S. industrial conglomerate to pursue.
Third Point, run by billionaire Dan Loeb, in April said the spin off of the aerospace business could create more than $20 billion in shareholder value.
Sales in Honeywell's performance materials and technologies unit, which makes catalysts and adsorbents used for petroleum refining, dropped about 8 percent to $2.24 billion in the quarter. Honeywell had forecast a decline of 10 percent to 12 percent.
The business benefited from higher sales of Honeywell's Solstice low global-warming potential refrigerant products, the company said. Margins in the business rose to 23.4 percent from 21.4 percent.
Honeywell also raised the low end of its full-year earnings per share forecast range by 10 cents to $7.00. The company kept the high end of the range unchanged at $7.10.
Honeywell said it now expects 2017 sales in the range of $39.3 billion to $40 billion, compared with its previous forecast of $38.6 billion to $39.5 billion.
Analysts on average were expecting 2017 earnings of $7.09 per share on revenue $39.43 billion, according to Thomson Reuters I/B/E/S.
"We expect continued momentum in organic sales growth throughout 2017, supported by strong order rates and a growing backlog across many of our businesses," Chief Executive Darius Adamczyk said in a statement.
Net income attributable to Honeywell increased 5.5 percent to $1.39 billion, or $1.80 per share, in the second quarter.
The company's revenue rose about 1 percent to $10.08 billion.
Analysts on average had expected second-quarter earnings of $1.78 per share, and revenue of $9.89 billion.
Shares of Honeywell were marginally down at $134.78 in premarket trading on Friday. (Reporting by Ankit Ajmera in Bengaluru; Editing by Maju Samuel)