Honeywell, has unveiled an ambitious plan to realign its business operations. This strategic move is aimed at capitalizing on three significant global megatrends: automation, the future of aviation, and energy transition. By reorganizing its various business segments to revolve around these trends, Honeywell seeks to create a platform for accelerated organic sales growth and more effective capital deployment, ultimately leading to increased value for its shareholders. This transition is scheduled to take effect from the first quarter of 2024.
Vimal Kapur, the Chief Executive Officer of Honeywell, shared the company’s commitment to delivering differentiated, profitable growth. He emphasized that this decision came after a thorough review of their portfolio. The chosen strategy is to organize their businesses according to three powerful megatrends, each strongly supported by Honeywell’s robust digitalization capabilities and innovative solutions. This simplified structure is envisioned to help Honeywell realize synergies, thereby expediting their innovation playbook and enhancing their financial strength through their Accelerator operating system.
“As we enter the next phase of transformation, this realignment will enable us to consistently deliver our upgraded financial algorithm, drive innovation that will help solve the world’s toughest sustainability and digitalization challenges, and deploy capital more effectively,” stated Vimal Kapur, outlining the benefits of this strategic shift.
To execute this reorganization, Honeywell will adopt an updated reporting structure, incorporating four primary segments, each bolstered by the company’s top-tier Accelerator operating system and Honeywell Connected Enterprise integrated software platform. This strategic shift is designed to empower Honeywell to better serve its customers and position the company for outstanding performance in any economic environment.
- Aerospace Technologies (AT): Honeywell’s aerospace products are widely used in both commercial and defense aircraft worldwide. They play a pivotal role in shaping the future of air travel, which includes driving advancements in air mobility and promoting sustainability through the electrification of aircraft.
- Industrial Automation (IA): With a rich history spanning more than five decades, Honeywell has been at the forefront of industrial automation. Their expertise extends to process industry operations, world-class sensor technologies, automated supply chains, smarter warehouses, and improved worker safety. This reorganization is expected to build upon Honeywell’s core strengths in controls and automation technologies, delivering better commercial outcomes for their customers while driving growth.
- Building Automation (BA): Honeywell, through its hardware, software, sensors, and analytics, assists its customers in transforming buildings into integrated, secure, and more sustainable assets. Their solutions and services are utilized in more than 10 million buildings worldwide, and the Building Automation segment is poised to strengthen Honeywell’s position in end markets such as hospitals, airports, education, and data centres.
- Energy and Sustainability Solutions (ESS): With a long-standing focus on sustainability, Honeywell is at the forefront of the energy transition. Their contributions include improving resiliency and efficiency, reducing emissions, and facilitating the circular economy. Honeywell’s expertise in this area will continue to address some of the world’s most pressing challenges across various end markets.
In line with this restructuring, new leaders have been appointed for these business groups. Starting on January 1, 2024, Lucian Boldea will serve as the President and CEO of the Industrial Automation segment, while Ken West will take on the same roles for the Energy and Sustainability Solutions segment. Both Boldea and West will report to CEO Vimal Kapur and serve as company officers.
Billal Hammoud will continue as the President and CEO of the renamed Building Automation segment, and Jim Currier will remain in his role as President and CEO of the renamed Aerospace Technologies segment. Kevin Dehoff will also continue as the President and CEO of Honeywell Connected Enterprise.
In emphasizing the capabilities of these new leaders, Vimal Kapur noted, “Our strategic business group leaders are well-positioned to lead Honeywell in both organic and inorganic growth. They have demonstrated a deep understanding of our customers and end markets and are capable of delivering strong results across our industries. Their combined experience and drive to create value for customers and shareholders position Honeywell well for the future.”
Honeywell has also provided an update on its performance for the third quarter and the full year. The company expects robust results for the third quarter, aligning with previously issued guidance ranges for sales and segment margin. Notably, this performance is being driven by the strength of the Aerospace and Performance Materials and Technologies business groups. Furthermore, earnings per share are anticipated to meet or exceed the previously issued guidance range, with full-year results expected to fall within the same range. For those interested in further details, Honeywell will be conducting its quarterly earnings announcement later this month.