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BOSTON, July 17 (Reuters) - Diversified manufacturer Textron Inc (TXT.N) on Thursday issued a third-quarter forecast that fell far short of Wall Street expectations, due to surging energy costs and a softening economy, sending shares down 7 percent.
The world's largest maker of corporate jets, which posted a 23 percent increase in second quarter profit, expects third-quarter profit of 80 cents to 90 cents per share. Wall Street expects 99 cents per share, according to Reuters Estimates.
Textron, which also makes Bell helicopters and EZ-GO golf carts, kept its full-year profit target steady.
"Since we first discussed our outlook, oil has been up well over $50 per barrel and other commodities are up significantly as well," said Lewis Campbell, chairman and chief executive, on a call with investors.
"This is having a direct impact on us through increased costs particularly in our industrial segment. Higher commodity costs have stressed the U.S. and global economies," he added.
J.P. Morgan analyst Stephen Tusa wrote in a note to clients: "Guidance for (the third quarter) was light, but this company has been conservative before and the strong (aerospace and defense) backlog shows that it's not about a lack of revenue visibility to do with the economy."
Second-quarter net earnings came to $258 million, or $1.02 per share. That compares with $210 million, or 83 cents per share, a year earlier.
Profit from continuing operations was $1.03 per share. On that basis, analysts had expected 96 cents per share, according to Reuters Estimates.
Revenue rose 21 percent to $3.92 billion.
Providence, Rhode Island-based Textron said it had order backlogs of $16 billion for Cessna corporate jets, $5.2 billion for helicopters, and $2.3 billion for defense products such as armored vehicles.
Profit in the second quarter was up 31 percent at Cessna and 29 percent at its defense arm. Earnings at its finance arm tumbled due to higher loan-loss provisions and a decline in fee income.
Textron shares fell $4.35, or 9.5 percent, to $41.63 on the New York Stock Exchange.
So far this year, Textron shares are down 40 percent, far deeper than the 18 percent decline in the Standard & Poor's capital goods industry index .GSPIC.
Textron's competitors include corporate jet makers Gulfstream International Group GIA.A and Bombardier (BBDb.TO) and helicopter makers Eurocopter, a unit of EADS EAD.PA, and Sikorsky, a unit of United Technologies Corp (UTX.N). (Reporting by Scott Malone; Editing by John Wallace and Derek Caney)