Honeywell operates across a wide array of industries and countries, including Aerospace, Honeywell Building Technologies, Performance Materials and Technologies, and Safety and Productivity Solutions. The company designs, manufactures, and sells a broad spectrum of products within these sectors, such as aircraft engines, control systems, industrial equipment, specialty chemicals, and safety and productivity solutions. This diversified profile allows Honeywell to mitigate risks associated with economic cycles affecting specific sectors while maximizing its total earning potential.

The Aerospace segment supplies products, software, and services for aircraft, serving OEMs and markets such as air transport, general aviation, airlines, and defense. Offerings include engines, avionics, connectivity services, power systems, flight safety equipment, and radar systems. Aerospace also provides spare parts, repair, maintenance services, and licenses intellectual property. Honeywell Forge solutions enhance predictive maintenance and fleet management. In 2023, Aerospace reported revenue of $13,624 million, with $2,397 million from Commercial Aviation Original Equipment, $6,241 million from Commercial Aviation Aftermarket, and $4,986 million from Defense and Space.

Honeywell Building Technologies is a global provider of products, software, solutions, and technologies that ensure buildings are safe, energy-efficient, sustainable, and productive. The offerings include advanced software for building control and optimization, energy management systems, access control, video surveillance, fire safety products, and system installation, maintenance, and upgrades. Honeywell Forge solutions enable digital building management, connecting data from various assets for smart maintenance and enhanced building performance. In 2023, this segment reported revenue of $6,031 million, with $3,583 million from Products and $2,448 million from Building Solutions.

Performance Materials and Technologies is a global leader in performance chemicals, materials, process technologies, and automation solutions. This segment includes Process Solutions, UOP, and Advanced Materials. Process Solutions offers automation control and software for industries like oil and gas, refining, and biofuels. UOP provides process technology, catalysts, equipment, and consulting for petroleum refining and gas processing. Advanced Materials produces high-performance products for bullet-resistant armor, computer chips, and eco-friendly materials. Honeywell Forge enhances industrial productivity, efficiency, and cybersecurity. In 2023, this segment reported $11,506 million in revenue: $2,586 million from UOP, $5,267 million from Process Solutions, and $3,653 million from Advanced Materials.

Safety and Productivity Solutions provides products and software designed to enhance productivity, workplace safety, and asset performance. This segment includes:

  • Sensing and Safety Technologies, which offers personal protective equipment, gas detection technology, sensors, switches, and cloud-based emergency messaging.
  • Productivity Solutions and Services provide mobile devices, software for data collection, thermal printing, and asset management.
  • Warehouse and Workflow Solutions encompass system design, automation, performance optimization software, and lifecycle services to improve warehouse operations.

Honeywell Forge solutions further enhance efficiency by digitally automating processes. In 2023, this segment reported $5,489 million in revenue, with $2,733 million from Sensing and Safety Technologies, $1,313 million from Productivity Solutions and Services, and $1,443 million from Warehouse and Workflow Solutions.

Over time, Honeywell has incrementally transitioned its portfolio through several divestitures and a focus on innovation and digitization, shifting towards higher-value work. This strategic shift has contributed to margin improvement, despite mediocre top-line revenue growth, with healthy organic growth. Additionally, Honeywell provides services such as maintenance, repair, and support for its products, particularly in the aerospace and building technologies sectors. These services generate recurring revenue for the business, typically at higher margins.

Honeywell operates a diversified portfolio of market-leading brands, providing industry-leading technology and manufacturing solutions. The group has its own brands such as Honeywell Building Management Systems, Facility Optimization, Hospitality or Multisite as well as external brands such as Alerton, CentraLine or Phoenix Controls. In 2016, it acquired Intelligrated to strengthen its position in the warehouse automation and e-commerce fulfillment space and in June 2024, it acquired CAES to enhance Defense Technologies across Land, Sea, Air and Space.

In 2023, the company achieved $37 billion in sales, distributed across four segments: Aerospace Technologies (37%), Building Automation (17%), Industrial Automation (29%), and Energy & Sustainability Solutions (17%). Revenue is generated from five regions, with North America being the most significant at 52%, followed by Europe (18%), Asia Pacific (18%), the Middle East and Africa (8%), and Latin America (4%).

Margins have improved significantly in recent years alongside an increase in recurring revenue services. The operating margin has grown from 16.61% in 2014 to 22.65% in 2023 and is expected to approach 25% by 2026. Net margin has also shown solid performance, rising from 10.52% in 2014 to 15.43% in 2023, and is projected to reach 17.67% by 2026.

EBITDA has grown by 21.76% over this period, while the company's ROE has shown the most remarkable performance, increasing from 25% in 2014 to 36.3% in 2023. Analysts expect it to reach 46% by 2026, positioning the company among the highest ROE performers in the industry. The company is trading at a P/E ratio of 24.8 for the year 2023, slightly below its 10-year average of 27.4x.

The company continues to invest heavily in R&D across various industries, positioning itself well for future growth. In 2023, it allocated $8.3 billion to share repurchases, dividends, capital expenditures, and M&A activities. Additionally, the group continues to invest 4% to 5% of sales in research and development, with the aim of benefiting shareholders over the long term.

Honeywell faces challenges in executing and integrating acquisitions, which may impact its ability to achieve planned divestitures, crucial for future growth. This growth is largely dependent on developing new technologies and introducing market-accepted products in increasingly competitive markets with acceptable margins. As a supplier to the US government, Honeywell is subject to unique risks, such as contract termination rights and operational audits, adding another layer of complexity. Furthermore, significant investments in future technologies carry the risk of potential missteps amid substantial structural shifts across various industries. This competitive and regulatory landscape is also navigated by Honeywell's main competitor, General Electric, which pursues similar technological advancements.

Honeywell's success is rooted in its diverse operations and strategic focus on automation, aerospace, and energy transition. The company's ability to innovate and seamlessly integrate acquisitions has expanded its market share. By staying at the forefront of industry advancements, Honeywell is well-positioned for continued growth in the future while operating in highly competitive industries.