Thermostats and jet engines seem worlds apart, but they're the wind beneath Honeywell International's wings. More than a century old, the company is a diverse industrial conglomerate with four segments; the largest are Automation and Control Solutions (ACS -- making HVAC and manufacturing process products) and Aerospace (turbo engines and flight safety and landing systems). Additional segments include Performance Materials and Technologies (PMT, formerly Honeywell Specialty Materials, thermal switches, fibers, and chemicals) and Transportation Systems (engine boosting systems and brake materials). The US government accounts for about 12% of revenue (primarily Aerospace).
Honeywell has approximately 1,300 manufacturing, research, and sales offices and facilities; more than 40% of its products are manufactured in Asia and Europe, and the US represents about 60% of sales. Other key international markets are Canada and Latin America.
Honeywell's segments include Automation and Control Solutions (ACS; 42% of total sales), Aerospace (32%), Performance Materials and Technologies (PMT; 16%), and Transportation Systems (9%).
Honeywell has enjoyed three straight years of unprecedented growth. Its revenues rose by 3% from $36.5 billion to $37.8 billion in 2012. Its net income surged by 42% from $2.1 billion in 2011 to $2.9 billion in 2012. Both these totals represented historic milestones for the company.
The revenue growth was driven by a 9% spike in PMT sales, a 5% jump in Aerospace sales, and a 2% increase in ACS sales, due to acquisitions and organic growth. The rise in net income was the result of lower sales, general, and administrative expenses coupled with the higher revenue growth.
For all its segments Honeywell is focusing on several issues and initiatives, including expanding in such emerging area as China, India, Eastern Europe, Latin America, and the Middle East; managing raw material costs through hedging; staying alert for liquidity issues among suppliers and customers; and controlling costs related to asbestos and environmental matters. Honeywell's strategy for this growth includes both acquisitions and the divestiture of under-performing units.
In mid-2013 Honeywell acquired RAE Systems for $340 million. RAE Systems makes intelligent gas and radiation detection systems that allow for real-time safety and security threat detection. Months later, Honeywell purchased Intermec, a maker of bar code scanners, RFID readers, mobile and fixed vehicle computers, printers, and label media, for $600 million. Both companies will be integrated into Honeywell Analytics, a part of Honeywell Life Safety in Honeywell Automation and Control Solutions.
Honeywell made several acquisitions in 2012 that expanded its energy product portfolio. It picked up INNCOM, a software maker catering to the lodging, health care, and education sectors. Shortly after, it obtained a 70% stake in Thomas Russell, a manufacturer of natural gas processing equipment, for $525 million. It also purchased Saia-Burgess Controls, a provider of building controls technology, for $130 million
in 2011 sold its Consumer Products Group (CPG) for nearly $1 billion in cash to private New Zealand-based investment firm Rank Group Limited. CPG housed well-known automotive brands such as FRAM filters, Prestone antifreeze, and Autolite spark plugs. Also in 2011 ACS sold its less promising Automotive on Board sensors portfolio, part of its sensing and control business, to Sensata Technologies.