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Honeywell’s weak second quarter prompts plans to cut 6,000 jobs

SHARE Honeywell’s weak second quarter prompts plans to cut 6,000 jobs

NEWARK, N.J. (AP) — Honeywell Inc. plans to eliminate 6,000 jobs worldwide within the next year to cut costs after a weaker-than-expected second quarter.

The manufacturing giant said Monday it would also merge its polymers and specialty chemicals businesses and close a semiconductor chip packaging plant in California to streamline underperforming units.

Honeywell last month predicted that earnings for the quarter would not be as high as expected because of parts shortages in its aerospace unit, higher raw material prices and higher interest rates.

The company formed by the merger of Honeywell and AlliedSignal in December said Monday it expects to earn 75 cents a share when it announces its second-quarter earnings on July 18. Last month, it predicted earnings would be 73 cents to 77 cents a share, lower than analysts' expectations of 78 cents a share.

Honeywell spokesman Tom Crane said the job cuts would come from a hiring freeze, attrition and retirements, and would be worldwide. The company has 120,000 employees, including about 2,500 at its Morris Township headquarters and at an aerospace plant in Teterboro.

"All open jobs now are not being filled," Crane said.

Honeywell stock was unchanged at $35 in heavy trading on the New York Stock Exchange.

The company said it expected second-quarter sales growth of about 6 percent to $6.3 billion, driven by aerospace and turbocharger projects. It said revenue would suffer from lower sales in its industrial automation and control, truck brakes and aerospace electronics divisions because of parts shortages.

For the year, it said it expects earnings per share to grow between $3 and $3.05 in the quarter on sales growth of 8 percent to 10 percent. Analysts surveyed by First Call/Thomson Financial had predicted growth of $3.11 per share.

CEO Michael Bonsignore blamed the profitability problems on high raw material prices, noting that oil prices have tripled, and unfavorable exchange rates between the euro and the dollar.

He said Honeywell will focus its investments on core businesses such as aerospace, home and building control, turbogenerator, turbocharger and electronic materials businesses.

"Management realizes that its credibility is dependent on strong, consistent performance every quarter, and we are committed to taking the steps — both short and long-term — to deliver the full value of Honeywell's impressive global franchises," Bonsignore said.

The polymers and specialty chemicals merger will create a unit with $3.3 billion in annual sales, about 10,000 employees and more than 50 facilities around the world. The company blamed low profit margins in those areas on high materials costs.

Bonsignore said the company still expects to save $250 million from the AlliedSignal merger.

Honeywell sells aerospace products, home and industry technology, power-generation systems, automotive products, specialty chemicals, fibers and plastics.