(Reuters) - U.S. industrial conglomerate Honeywell International Inc (HON.N) said on Friday it had started sourcing some of its components from countries other than China to counter growing costs related to a tariff war between the world’s two largest economies.
Honeywell’s shares rose as much as 4.4 percent to $153.99 after the company also reported a better-than-expected quarterly profit and raised its 2018 profit forecast for the third time as it benefits from increased demand for aircraft parts and services.
The conglomerate said it had boosted prices on some of its products and had locked in purchases of some raw materials and components before new tariffs on imports from China came into effect.
“The key here is to get ahead of it early, and I think we definitely have,” Chief Executive Darius Adamczyk told a conference call with analysts after the company’s second quarter results. “If you sit and wait, you could see substantial margin contraction.”
The maker of engines for business jets produced by Bombardier (BBDb.TO) and Textron (TXT.N) raised the low end of its full-year margin forecast to 19.4-19.6 percent from 19.3-19.6 percent, and said it was expecting limited impact from known tariffs due to its mitigating actions.
Honeywell and other industrial firms are seeing costs rising after President Donald Trump imposed a 25 percent tariff on imports of steel and 10 percent on aluminum from China and other countries.
“I wouldn’t tell you we’re not impacted, but we’re a lot more prepared,” Adamczyk said.
Excluding items, Honeywell earned $2.12 per share in the second quarter ended June 30, beating
