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Honeywell Posts 38% Drop in Earnings

Honeywell International said on Monday that its second-quarter earnings dropped 38 percent as the company’s businesses in troubled sectors like automobiles and construction continued to drag down its results.

The company said it did not expect any recovery this year from the recession, as customers like airlines are expected to keep holding off on the purchase of Honeywell parts.

The diversified manufacturer earned $450 million, or 60 cents a share, in the three months ended June 30, down from $723 million, or 96 cents a share, a year ago. Results matched the expectations of analysts polled by Thomson Reuters.

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Less construction hurts sales of Honeywell thermostats.Credit...Paul Sakuma/Associated Press

Revenue fell 22 percent, to $7.56 billion, from $9.67 billion a year ago. Analysts were expecting revenue of $7.73 billion.

The company expects 2009 earnings of $2.85 a share on revenue of $31.5 billion, at the low end of its previous guidance.

“We are executing very well. Unfortunately, it is a very tough economic environment,” said David M. Cote, Honeywell’s chief executive.

Honeywell’s broad exposure to battered sectors like aerospace and automakers reduced profits during the first half of 2009.

Honeywell said it expected to reduce costs by about $110 million this year with steps like plant shutdowns and furloughs; it expects that the moves will save $200 million next year.

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David Cote, the chief, blamed the economic environment.Credit...Antoine Antoniol/Bloomberg News

But the company warned that this would still be a difficult year, and it cut its forecast when it released its first-quarter earnings in April.

Sales in the aerospace unit, which makes radar systems and other aviation equipment, dropped 17 percent, to $2.7 billion. Honeywell said many of its airline customers were choosing to use parts from their own idled planes for repairs rather than buying new parts from the company.

At the transportation systems unit, where Honeywell makes products like turbo chargers for car engines, sales plunged 41 percent, to $786 million.

One of the few growth areas is military sales, where Honeywell expects a 3 percent growth in sales. David J. Anderson, the company’s chief financial officer, said Honeywell could also win orders worth several hundred millions of dollars in the second half of the year from work in areas like energy efficiency for buildings, financed by stimulus spending.

Honeywell shares rose 21 cents, to $34.20, in trading on Monday.

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