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Honeywell’s Performance Materials and Technologies segment

Ally Schmidt

Key investor takeaways from Honeywell’s 4Q14 and 2014 performance (Part 5 of 9)

(Continued from Part 4)

Segment’s business

Honeywell’s (HON) Performance Materials and Technologies segment is a global leader in developing and manufacturing advanced materials and process technologies. The materials and technologies are used in a wide range of industries and applications.

Some of the key technologies that the segment makes are:

  • Fluorine technology—including non-ozone depleting and low global warming potential refrigerants and blowing agents

  • Specialty films, additives, and chemicals

  • Advanced fibers and composites for armor and industrial applications

  • Intermediate products—including nylon feedstock caprolactam, nylon resin, ammonium sulfate fertilizers, and chemical intermediates

  • Electronic materials and chemicals

  • Process technology, equipment, catalysts, adsorbents, and services for the refining, petrochemical, and natural gas industries

  • Control systems for continuous-process industries

Key competitors

Honeywell primarily competes with companies like Dupont, Mexichem Fluor, Daikin, Degussa, E. Merck (MRK), Thermo Fisher (TMO), American Biaxis, Westlake (WLK), KMG Chemicals (KMG), Brewer, Dow (DOW), Nikko, Shell/Criterion, BP/Amoco (BP), ExxonMobil (XOM), Chevron (CVX), Lummus Global, and Chicago Bridge (CBI). Some of these companies are a part of the Materials Select Sector SPDR (XLB).

Segment’s performance

For the quarter, sales were up 3% on an organic basis. The sales were primarily driven by higher UOP licensing sales, software and services growth in process solutions, and higher sales in advanced materials—particularly in fluorine products. This was offset by the currency exchange rates.

The segment’s margins saw better-than-expected improvements. They were driven by higher volume, the favorable impact of higher UOP licensing sales, and productivity net of inflation—partially offset by continued investments for growth.

  • Honeywell continues to see strong order trends in gas processing—particularly at UOP Russell. In the quarter, a higher mix of licensing revenue resulted in a tailwind for the margin.

  • The company’s grew 6% on an organic basis as a result of strong volume growth. It was driven by the advanced solution software business and the service business in all of the regions.

  • Advanced material sales increased 4% on an organic basis. They were driven by better sales, order growth in flowing products, and growing demand for a new low global warming potential suite of Solstice products. This was partially offset by a decline in resins and chemical sales.

Continue to Part 6

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