Honeywell International Inc. (HON.N) rose after posting solid second-quarter sales growth amid a tariff war and global economic slowdown, though it flagged weaker sales ahead.

Organic sales, which strip out effects from portfolio changes and foreign currency fluctuations, rose five per cent in the second quarter, Honeywell said in a statement, marking the eighth quarter of five per cent growth or better. The company now expects 2019 earnings per share of US$7.95 to US$8.15, raising the forecast at the low end by 5 cents.

Key Insights

• Honeywell forecast organic sales growth of two per cent to four per cent for the third quarter, much lower than a peak of eight per cent in the first quarter. Robust aerospace demand is being offset by weaker orders for warehouse automation equipment, which should begin to ease in the fourth quarter, the company said in a conference call with analysts.
• The manufacturer is benefiting from strong demand for commercial airliners, business jets and defense systems, as well as an e-commerce boom that’s stoked sales of warehouse automation equipment. Those trends have helped offset higher tariffs on products sold to China amid signs of a cooling world economy.
• While investors have applauded Chief Executive Officer Darius Adamczyk’s move to shed two slow-growing businesses last year, the company hasn’t yet parlayed the proceeds into buying companies to accelerate growth. Honeywell spent about $600 million on acquisitions in the last two years compared with US$2.6 billion in 2016.
• One consolation for investors: share buybacks jumped to US$4 billion last year from US$2.1 billion in 2016. The company said in May it will have as much as US$19 billion available over the next three years -- after outlays on capital expenses and dividends -- for acquisitions or buybacks.

Market Reaction

Honeywell rose 2.1 per cent to US$172.18 at 10:03 a.m. in New York. The shares had climbed 28 per cent this year through Wednesday, outpacing a 19% gain for the S&P 500 Index.

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Second-quarter earnings per share were US$2.10, while analysts had predicted $2.08.