Honeywell CEO David Cote characterized his company's second-quarter performance as a "rebound," and told CNBC on Monday that most sectors of the diversified U.S. manufacturer's businesses are strong.
"It’s been kind of surprising," Cote said. "With exception of aerospace sales, everything else seems to be coming back."
Earlier Monday Honeywell reported a 4 percent rise in profit for the second quarter to $468 million, or 60 cents per share, from $450 million, also 60 cents a share, a year earlier.
Honeywell's growth was across its various businesses, including specialty materials and automation and control systems, Cote said. He said the lag in commercial aerospace should turn around as well, because orders looking out over the next six months are up. Cote added that the growth was consistent throughout Honeywell's markets in the U.S., Europe, Asia, India, and the Middle East.
"It's one of the reasons I’m encouraged," Cote said.
At the same time, headlines talking of economic weakness still make him a bit nervous. "That's why we’re staying cautious in our outlook," he said.
The biggest headwind the company faces, however, is not from the economy, but from Honeywell's aggressive approach to pension accounting. The approach causes the company to expense things early, Cote said.
"If you took a look at our operating earnings performance in the second quarter, we were actually up 24 percent, up 26 or 27 percent for the first half," Cote said. "We’re really getting some good leverage from those sales."
Cote also credits the company's success to its combination of growth and cost cutting. "That’s why you see such good leverage on the sales — 8 percent sales growth, 24 percent earnings growth," Cote said. "We’re getting the sales, but we’re also getting the follow-through because we’re careful of what we do on the cost side."
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