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Dallas • Honeywell International Inc. posted third-quarter profit Friday that exceeded analysts' estimates and raised the low end of its full-year earnings targets as a housing rebound spurred sales of thermostats and air purifiers.
Net income rose to $1.2 billion, or $1.47 a share, compared with $990 million, or $1.24, a year earlier, the Morris Township, N.J.-based company said. Analysts on average predicted earnings a share of $1.41, according to data compiled by Bloomberg.
Honeywell benefited from "U.S. relative strength" in economic growth while Europe is slow but stable and China shows continued expansion, the company said in a slide presentation. Honeywell's earnings will increase faster than the market in general as it improves efficiency and introduces new products, Chief Executive Officer Dave Cote said in the statement.
"Looking ahead to 2015, we're once again planning for a slow growth macro environment, but expect to continue delivering strong earnings growth," Cote said.
U.S. housing starts hit a seven-year high in July, spurring demand for products such as water-heater controls. Energy services, including technology to separate water from gas and catalysts to raise refinery efficiency, are riding an energy boom while aerospace-defense sales grew after dropping in the first two quarters.
Sales rose 4.8 percent to $10.1 billion. Analysts had estimated sales of $10 billion. Honeywell in July completed the sale of its auto brakes business for about $155 million, which reduced revenue.
Automation and Control Solutions led sales growth with a 8.8 percent gain, aided in part by last year's acquisition of the hand-held computer company Intermec Inc. Sales rose 6.7 percent at the Performance Materials and Technologies unit on sales of catalysts and gas processing services. Aerospace sales were little changed after the unit incorporated Transportation Systems, which saw sales decline 10 percent because of the brakes-business sale.
Honeywell raised the lower end of its 2014 forecast of adjusted earnings per share by 5 cents to $5.50. It boosted the lower end of its annual sales target by $100 million to $40.3 billion to $40.4 billion. The company increased the lower end of its profit target by 5 cents in the previous two quarters.
A lower-than-normal tax rate of 24.6 percent in the third quarter added 4 cents to earnings per share, the company said. Segment profit margins increased to 17.4 percent from 16.7 percent a year earlier.
For the fourth quarter, Honeywell expects earnings per share of $1.37 to $1.42, which is below analysts' average estimates of $1.47. Sales are expected to be little changed at as much as $10.4 billion, Honeywell said.