Aerospace parts maker Honeywell International Inc on Friday forecast 2017 organic sales growth rate to improve for the first time in three years, partly helped by the stabilizing oil and gas market.
The company's shares, which fell as much as 2.4 percent in morning trading, pared losses and were up nearly 1 percent in the afternoon.
Honeywell — which makes parts for business-jet makers Bombardier Inc, Textron Inc and General Dynamics Corp — said a higher tax rate in the current quarter led to fourth-quarter earnings being forecast at the lowest end of its previous range.
The company expects 2017 organic sales to grow in a range of 1-3 percent. The growth rate was up 3 percent in 2014, 1 percent in 2015 and is expected to be down 1-2 percent in 2016.
Honeywell forecast higher overall demand in 2017, particularly in the oil and gas market and high-growth regions including China and India.
Oil prices have rise nearly 48 percent this year to about $55 a barrel, boosted by the Organization of the Petroleum Exporting Countries' decision to curb oil output.
"In oil and gas, we're seeing more positive sentiment from our customers and signs of a slight recovery...which is freeing up projects that had been delayed," CFO Thomas Szlosek, said on a conference call.
The Morris Plains, New Jersey-based company gets about 12-14 percent of its revenue from the oil and gas industry.
Honeywell said organic sales at its performance materials and technologies unit, which makes catalysts and adsorbents used in petroleum refining, are expected to be up 2-4 percent in 2017.
The diversified industrial conglomerate's revenue has been hurt in 2016 due to lower capital spending by oil and gas customers and slowing business jet sales.
The company said on Friday it expects the business jet market to remain weak in 2017, but expected higher defense spending by the United States.
Honeywell's sales in the overall aerospace business, its biggest, are expected to be down 1-4 percent at $14.2 billion-$14.6 billion in 2017.
The company said it expects fourth-quarter earnings of about $1.74 per share, compared with its previous forecast of $1.74-$1.78.
Honeywell forecast 2017 earnings per share of $6.85-$7.10, compared with the average analysts' estimate of $7.08 per share, according to Thomson Reuters I/B/E/S.
Up to Thursday's close, Honeywell's stock had risen about 13 percent this year, compared with a 10.2 percent rise in the S&P 500 index.
(Editing by Saumyadeb Chakrabarty and Shounak Dasgupta)