American aviation giant Honeywell Aerospace, known for its manufacturing portfolio of aircraft engines, avionics, auxiliary power units, and other aviation systems, has lowered its 2026 sales growth forecast, apart from issuing a weaker-than-expected earnings outlook, citing persistent supply chain constraints that continue to hamper the venture’s ability to capitalize on strong demand for aftermarket products and services.
For the Q2, Honeywell Aerospace reported adjusted earnings of USD 1.87 per share, down 32% from a year earlier, while revenue increased 5% to USD 4.52 billion. Both figures fell short of market expectations.
The company now expects organic sales growth of 4% to 5% in 2026, down from its earlier projection of 7% to 9%. Honeywell also forecast adjusted earnings per share of USD 7.60 to USD 7.90 for the year, well below analysts’ consensus estimate of USD 8.86.
Although higher sales volumes and improved pricing supported Honeywell’s overall revenue growth, profitability got impacted by rising costs and an unfavorable business mix. Among its business segments, quarterly profit in electronic solutions declined 3%, while for engines, numbers went down by 32%. The control systems business became the saving grace by posting an 8% increase.
As per Honeywell, supply shortages have forced it to prioritize original equipment deliveries to industry peers like Boeing and Airbus, both of which are ramping up aircraft production. As a result, output has been diverted away from the company’s higher-margin aftermarket business, which continues to witness robust demand.
“We continue to see very strong demand. The challenge remains on the supply side,” Chief Financial Officer Josh Jepsen said while interacting with Reuters.
Jepsen said that the company is also allocating more capacity to domestic defense and space programs at the expense of typically higher-margin international contracts, resulting in a less favorable sales mix, that will likley weigh on Honeywell’s financials and profits during the second half of the year.
CEO James Currier, while announcing the numbers, acknowledged that the company’s efforts to resolve supply chain bottlenecks have not delivered the expected improvements in production.
“Our actions thus far have not been sufficient to create the output improvement I expected only a few months ago,” Currier said during the company’s post-earnings conference call.
To strengthen its supply chain network, Honeywell Aerospace will now be looking to increase investments in multi-sourcing and in-sourcing initiatives by four times in 2026, hoping it will improve the venture’s production resilience and reduce dependence on constrained suppliers.
The aerospace company began trading independently on the Nasdaq in June 2026 after completing its separation from Honeywell as part of a three-way corporate split. The spin-off resulted in approximately USD 100 million in separation-related expenses and inventory obsolescence charges.