Oct 7 Shares of Honeywell International Inc
plunged as much as 9 percent on Friday, a day after the
aircraft-parts maker cut the top end of its 2016 profit forecast
and said that sales would fall more than it had expected this
Honeywell makes parts for business-jet makers Bombardier Inc
, Textron Inc and General Dynamics Corp,
whose shares also fell on the company's downbeat forecast.
"Conditions are more difficult than anticipated in both the
business jet (original equipment manufacturing) and aftermarket
businesses," Honeywell Chief Financial Officer Tom Szlosek said
on a call with analysts on Friday.
Weakness in the oil and gas industry has reduced flying time
for both business jets and helicopters, he said. Economic
sanctions against Russia and an anti-corruption drive in China
are also factors affecting demand, he added.
Honeywell's shares were down 7.8 percent at $106.50 in
afternoon trading after hitting a seven-month low of $105.25.
The stock was the third-biggest loser on the S&P 500 index
Shares of Cessna jet maker Textron were down 3.5 percent
at$38.53 while those of General Dynamics, the maker of
Gulfstream jets, were down 0.8 percent at $152.94. Learjet-maker
Bombardier's shares were down 1.1 percent at C$1.74.
Business-jet makers are forced to offer more discounts to
prevent buyers from canceling orders or delaying purchases,
analysts and dealers have said.
Honeywell said it had to pay higher incentives to commercial
planemakers in the third quarter to encourage them to buy its
Investors are worried about how long it will take Honeywell
to improve its organic sales growth rate, which is set to fall
for the third consecutive year, William Blair & Co analyst
Nicholas Heymann told Reuters.
Honeywell said on Wednesday that 2016 core organic sales
were now expected to fall 1-2 percent.
The company had earlier forecast a 1 percent decline. The
growth rate was 1 percent in 2015 and 3 percent in 2014.
The company said it expected 2016 earnings of $6.60-$6.64
per share, down from its previous forecast of $6.60-$6.70.
(Reporting by Ankit Ajmera in Bengaluru; Editing by Ted Kerr)