Honeywell International Inc and Ingersoll-Rand Plc raised their 2010 profit forecasts and General Electric Co boosted its dividend in moves that underlined U.S. manufacturers' growing confidence in the economic recovery.
Honeywell 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.
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.
Cote's caution reflected the memory of the sharp recent downturn, which prompted U.S. manufacturers to cut tens of thousands of jobs.
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, said Ingersoll Chief Executive Michael Lamach, taking a similar stance.
GE, however, showed a more confident side as it raised its dividend by 20 percent, a move that came earlier than investors had expected.
We are able to restore the GE dividend at a historical payout level for 2010 earlier than previously anticipated ... because of continued strong cash generation, recovery at GE Capital, and solid underlying performance in our industrial businesses, GE CEO Jeff Immelt said.
The move pushed shares of the largest U.S. conglomerate up nearly 4 percent and lifted the U.S. stock market. The Standard & Poor's capital goods industry group <.GSPIC> was up 2.2 percent in afternoon trading.
Ingersoll's Lamach -- who succeeded Herb Henkel earlier this year -- told Reuters his company, which halved its dividend during the downturn, was not likely to raise its payout this year as it is currently focused on earning a higher credit rating.
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
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.
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.
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.
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 Corp , 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 $43.51, Ingersoll was up 1 percent at $37.26 and Dover rose 3.1 percent to $47.47 on the New York Stock Exchange. GE shares were up 57 cents or 3.8 percent at $15.78 on the NYSE.
(Reporting by Scott Malone and Nick Zieminski; Editing by Derek Caney, Leslie Gevirtz and Matthew Lewis)