Honeywell Aerospace Cuts 2026 Forecast Amid Supply Chain Pressure on Aftermarket Sales

Honeywell Aerospace slashed its full-year 2026 sales and earnings forecast on Wednesday, citing persistent supply-chain constraints that are forcing the newly independent company to prioritize lower-margin deliveries to planemakers over its more profitable aftermarket business.

Revised Outlook Details

The aircraft parts and defense systems maker now expects 2026 organic sales growth of 4% to 5%, a significant reduction from its previous forecast of 7% to 9%. It also projected annual adjusted earnings per share between $7.60 and $7.90, well below the analyst consensus of $8.86, according to LSEG data.

The downward revision comes as the company manages production challenges while demand remains high. "Secular trends across our end-markets remain strong, while supply constraints limited output growth in the quarter," CEO Jim Currier said in a statement.

Supply Chain Squeeze

According to the company, supply issues are compelling it to focus on delivering original equipment manufacturer (OEM) parts to Boeing and Airbus as they increase production. This strategic choice diverts capacity from its higher-revenue, higher-margin aftermarket business, which includes spares and services for existing aircraft.

Aerospace suppliers often generate the bulk of their profits from the aftermarket segment. Chief Financial Officer Josh Jepsen told Reuters, "Demand continues to be really robust. It’s really a supply challenge." The company also noted it is favoring domestic defense programs over typically more profitable international contracts, contributing to a less favorable sales mix for the remainder of the year.

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Second-Quarter Performance

The revised guidance follows a second quarter where profitability was impacted by higher costs and the unfavorable business mix. Key results included:

• Adjusted Profit: Fell 32% year-over-year to $1.87 per share.
• Sales: Rose 5% to $4.52 billion, driven by volume and pricing.
• One-time Costs: Core profit fell 7% after the company incurred about $100 million in separation-related costs and inventory obsolescence charges.

Profit in its engines and power systems division dropped 32%, while its control systems unit posted an 8% rise. Commercial aftermarket sales, the company's largest market, grew 8% in the quarter.

Market Context

Honeywell Aerospace began trading on the Nasdaq in June after being spun off from its parent conglomerate, Honeywell, as part of a three-way corporate split. The forecast cut provides investors with one of the first major outlooks for the company as a standalone entity.