DALLAS: Honeywell International Inc’s confidence in its aerospace business was reinforced by the unit’s expanding sales of jet engines and cockpit controls that boosted first-quarter earnings as the company raised its 2018 profit target.

A drag on earnings as recently as last year, the aerospace business is taking off on higher demand for commercial aircraft parts and service, increased defence spending and a nascent rebound for business aircraft. Anticipating the turnaround, Chief Executive Officer Darius Adamczyk ignored pressure last year from activist investor Daniel Loeb to sell the business.

Sales in the unit rose 12 per cent to $3.98 billion (Dh14.60 billion), compared with a 4.3 per cent decline a year earlier when the outlook was still bleak.

The company is benefiting from strong economic growth in most regions, especially the US, where a corporate tax cut has boosted business confidence. A recovery in the oil market is driving stronger sales at the company’s energy-related business, and the e-commerce boom is ratcheting up demand for Honeywell’s warehouse-efficiency products.

Honeywell had total sales of $10.39 billion in the first quarter, up from $9.49 billion a year earlier, the company said in a statement on Friday. That beat analysts’ projections of $10 billion, according to the average of estimates compiled by Bloomberg. Adjusted earnings were $1.95 a share, excluding costs related to planned spin-offs, topping expectations of $1.91.

Earnings guidance

Honeywell raised its 2018 earnings target to a range of $7.85 to $8.05 a share, up from $7.75 to $8.

Loeb’s Third Point announced a stake in Honeywell less than a month after Adamczyk had taken over as CEO and immediately urged him to dump the aerospace business. Instead, Adamczyk decided to spin off its automobile turbocharger unit by the end of September and the home-products segment, which includes the iconic Honeywell-brand thermostat, by the end of the year.

Exiting those two businesses will cleave $7.5 billion off Honeywell’s sales and pressure Adamczyk to expand the company through acquisitions and whittle down the company’s growing cash pile of about $11 billion.

Honeywell fell 3.4 per cent this year through Thursday, trailing a 0.7 per cent increase for the Standard & Poor’s 500 Index. Last year, the stock climbed 32 per cent while the index rose 19 per cent.