Honeywell performs well as it takes evasive action over U.S. – China tariff war

U.S. industrial conglomerate Honeywell International’s revenue for the second-quarter 2018, ending June 30, rose 8.3 percent to US$10.92 billion, above a Wall Street estimate of US$10.80 billion. This earned US$2.12 per share for the quarter, a marked increase on analysts’ average forecast of US$2.01. The news saw the company’s share price rise by as much as 4.4 percent to US$153.99 as it raised its 2018 profit forecast for the third time amid increased demand for aircraft parts and services.

The company also announced at the end of last week that it had already begun sourcing components from other countries as a countermeasure against rising prices brought about by the tariff war between the world’s two largest economies. President Trump’s imposed tariffs of 25 percent on steel and 10 percent on aluminium from China have had an adverse effect on costs.

Prior to the new tariffs coming into effect, Honeywell managed to lock in the purchase of certain raw materials and components, though it has still had to boost prices on some of its products. According to Darius Adamczyk, Honeywell Chief Executive: “The key here is to get ahead of it early, and I think we definitely have. If you sit and wait, you could see substantial margin contraction.” Adamczyk also commented: “I wouldn’t tell you we’re not impacted, but we’re a lot more prepared.”

Honeywell makes engines for Bombardier and Textron business jets, while its aerospace division, which saw sales rise 10 percent to US$4.06 billion for the quarter, makes auxiliary braking systems and additional parts for both Boeing and Airbus single-aisle aircraft.

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