Manufacturers continue streak of profit beats

BOSTON/NEW YORK (Reuters) - U.S. manufacturers Honeywell International Inc , Ingersoll-Rand Plc and Dover Corp posted better-than-expected results on Friday, showing increased confidence in the economic recovery.

Honeywell, the world's largest maker of cockpit electronics, boosted its profit forecast for the rest of 2010, saying it expected to see organic sales -- excluding the effect of acquisitions and currency fluctuations -- to accelerate through the second half.

Ingersoll, which makes cooling systems for homes and businesses, also raised its full-year earnings view.

But the memory of the worst downturn the world economy has seen since the 1930s has not faded, prompting executives at both companies to say they remained wary even as they reported better-than-expected results.

"We believe the recovery is happening," Honeywell Chief Executive Dave Cote said on a conference call. "However, given ongoing economic uncertainties we remain cautious about the future."

Ingersoll Chief Executive Michael Lamach took a similar stance.

"We are certainly encouraged by our orders and backlog, but economic turns can be choppy, so we believe the best approach is to be conservative in our market outlook," Lamach said.

The reports continue a string of better-than-expected earnings from the sector. Caterpillar Inc , 3M Co and United Technologies Corp earlier in the week reported similarly strong results.

ASIAN BUILDING A BOOST

Morris Township, New Jersey-based Honeywell, which also produces systems to control the climate and security of large buildings said it looks for full-year earnings of $2.40 to $2.50 per share.

That marks the second time it has raised its full-year forecast since first issuing it, though the $2.50 high end of the range now matches what analysts had been expecting before Honeywell caught Wall Street off-guard with a lower than expected forecast back in December 2009.

Demand for equipment for commercial buildings strengthened in the quarter, more than economic data would suggest, Honeywell Chief Financial Officer Dave Anderson said.

The Architecture Billings Index, a leading indicator of U.S. construction spending, inched up in June though it still forecasts a decline in activity over the next six-to-nine months, according to data released on Wednesday.

Profit at Honeywell's automation and control systems, which sells products including thermostats and security systems, was up 16 percent in the quarter.

That growth reflected strong demand for equipment to make existing buildings more energy efficient.

"Aftermarket is a really big deal for us," Anderson said in an interview. "There's a lot of retrofit and upgrades, including energy-related upgrades that occur in commercial buildings."

Overall, the company saw the strongest growth for construction-related products in Asia. Sales of automation and control equipment were up 30 percent in India and 20 percent in China, compared with mid-single-digit percentage growth in the United States and low-single-digit percentage growth in Europe, Anderson said.

Sterne Agee analyst Nicholas Heymann noted Honeywell's end markets, which also include automotive turbochargers and specialty chemicals, "are clearly showing signs of turning and improvement" in every sector but aerospace, which remains soft.

Ingersoll, which also makes security systems and golf carts, said orders rose 10 percent in the quarter, boosted by demand in Asia for commercial cooling systems.

It notched its first quarterly sales growth in two years, said Lamach, who took over as CEO from Herb Henkel this year.

Orders were up across all Ingersoll units except for commercial security systems, where strong Asian building activity was not enough to offset the continued slump in U.S. new commercial construction.

"We expect challenging U.S. and European nonresidential construction markets to continue to dampen results" for the rest of the year, Lamach said.

Dover, which makes products ranging from supermarket equipment to technology for energy companies, also posted results that topped Wall Street expectations, citing broadly higher demand for industrial equipment.

Honeywell shares were up 2 percent at $43.38, Ingersoll was up 6 cents, or less than 1 percent, at $36.86 and Dover rose 3 percent to $47.51 on the New York Stock Exchange.

(Reporting by Scott Malone and Nick Zieminski; Editing by Derek Caney, Leslie Gevirtz)

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