By Aatreyee Dasgupta and Shivansh Tiwary
Aug 5 (Reuters) – Honeywell Aerospace lowered 2026 sales growth forecast and issued a weaker-than-expected earnings outlook on Wednesday, as persistent supply-chain hurdles crimped its ability to meet surging aftermarket demand.
The company said supply constraints are forcing it to prioritize commercial OEM deliveries to Boeing and Airbus as the planemakers ramp up production, diverting output from its higher-revenue, higher-margin aftermarket business.
Aerospace suppliers often sell systems and parts to planemakers at thinner margins, recouping much of their profit later through higher-margin aftermarket spares and services.
It is also favoring domestic defense and space programs over typically higher-margin international contracts, leaving a less favorable sales mix in the back half of the year.
“Demand continues to be really robust. It’s really a supply challenge,” Chief Financial Officer Josh Jepsen said in an interview with Reuters.
The aircraft engine, parts and defense systems maker expects 2026 organic sales growth of 4% to 5%, versus a 7% to 9% increase forecast earlier.
It projected annual adjusted earnings per share of $7.60 to $7.90, below analysts’ average estimate of $8.86, according to data compiled by LSEG.
Honeywell Aerospace was spun off from Honeywell as part of a three-way split of one of the last major industrial conglomerates. It debuted on the Nasdaq in June.
The company incurred about $100 million of separation-related costs and inventory obsolescence charges, resulting in a 7% year-on-year fall in quarterly core profit.
Second-quarter adjusted profit per share fell 32% to $1.87, while sales rose 5% to $4.52 billion.
Though higher sales volumes and pricing supported revenue growth, profitability came under pressure from higher costs and an unfavorable business mix.
Quarterly profit in its electronic solutions segment fell 3% and engines and power systems dropped 32%, while control systems posted an 8% rise.
“Secular trends across our end-markets remain strong, while supply constraints limited output growth in the quarter,” said CEO Jim Currier.
Commercial aftermarket sales, the company’s largest end-market, rose 8%, while defense and space sales increased 3%.
(Reporting by Shivansh Tiwary and Aatreyee Dasgupta in Bengaluru; Editing by Shilpi Majumdar)
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