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Manufacturing companies like GE are still suffering from Europe’s business slowdown

By Gina Chon
Published Last updated This article is more than 2 years old.

The neverending debt crisis in Europe continues to be a drag on earnings for manufacturing companies, from General Electric to Honeywell. Some of them have divisions that helped offset the European slowdown, and sales in emerging markets also helped. But the poor revenue in the industrial sector is not good news for them, or for Europe.

GE today posted a profit of $3.6 billion, which was in line with analyst estimates. Total industrial sales fell by 6%, largely because of a drop in revenue in its power and water unit. That division, which make gas engines, generators, water processing equipment, was hurt by the European recession. GE’s aviation unit had higher sales—it makes jet engines, air traffic management technology and other products.

Honeywell also saw a downturn in its power and water division. But a jump in sales at Honeywell’s energy unit, which was aided by an increase in US natural gas production, helped the company post a jump in profit. Honeywell also increased margins through costs cuts, and sales in China are expected to jump this year. The company said today it may see as much as a 7.9% rise in earnings per share for the second quarter because of the increase in energy demand.

Instead of Europe, Rockwell Collins, which makes aircraft parts, was hurt by US government defense cuts. As a result, Rockwell today posted flat profits, which didn’t surprise analysts. The company also announced that its CEO Clay Jones would be retiring on July 31 and will be succeeded by president Kelly Ortberg.

Next week in the industrial sector, all eyes will be on United Technologies, which reports earnings on April 22. The sale of its Otis elevators has been affected by the slowdown in Europe, but orders from China have helped. Analysts expect good news since United Technologies acquisition of Goodrich in 2011 is expected to have a positive impact on its earnings.

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