MORRIS TOWNSHIP, N.J. - Honeywell's second quarter 2014 sales rose 6 percent to $10.3 billion from $9.7 billion in the second quarter of 2013. Net income was $1.1 billion compared to $1.0 billion a year ago.
"Honeywell had another terrific quarter and a very good first half of 2014," said Honeywell Chairman and CEO Dave Cote. "Strong execution across our businesses and continued momentum across the portfolio helped us to deliver stronger than expected earnings. We saw 6 percent sales growth and margin expansion in every business as our key growth and productivity initiatives continue to make a difference. Our short-cycle businesses, particularly Energy, Safety and Security, and Turbo Technologies, are benefiting from improving end markets, new product introductions, and geographic expansion, while our long-cycle businesses are growing robust backlogs supported by favorable macro trends and strong win rates. Our recently announced closing of the sale of Friction Materials was a significant step in our effort to align the Honeywell portfolio around Great Positions in Good Industries. We believe that our portfolio is well positioned for continued growth."
In mid-July, Honeywell announced that it will realign its Transportation Systems business segment with its Aerospace business segment to better take advantage of the engineering and technology similarities and the shared business models between these two business segments. Under the realigned segment reporting structure, the company will have three business segments: Aerospace, Automation and Control Solutions, and Performance Materials and Technologies.
INDUSTRY SEGMENTS
Aerospace
Sales were approximately flat at $3.0 billion compared with the second quarter of 2013 driven by 1 percent Commercial sales growth, offset by a (1 percent) decline in Defense & Space. Commercial OE sales were approximately flat in the quarter reflecting continued growth in OE build rates, offset by higher BGA OEM payments and engine shipment timing. Commercial Aftermarket growth of 1 percent was driven by an increase in spares sales, partially offset by fewer maintenance events. Defense & Space sales declined (1 percent) as a result of lower sales to the U.S. government, partially offset by strong international growth.
Segment profit was up 2 percent to $592 million (2013: $583 million), and segment margins expanded 30 bps to 19.8 percent, driven by commercial excellence and productivity net of inflation, partially offset by BGA OEM payments, higher OE mix, and continued investments for growth.
Automation and Control Solutions
Sales were up 10 percent to $3.6 billion (2013: $3.3 billion) reported, 3 percent organic, compared with the second quarter of 2013, primarily driven by the favorable impact of acquisitions net of divestitures and growth in Energy, Safety, and Security, particularly Environmental and Combustion Controls and Honeywell Scanning & Mobility. ACS benefitted from strength in U.S. residential end markets and new product introductions, as well as continued growth in fire, gas, and the Americas Distribution business.
Segment profit was up 14 percent to $533 million (2013: $467 million) and segment margins expanded 50 bps to 14.8 percent driven by commercial excellence, productivity net of inflation, and higher volume, partially offset by the dilutive impact of acquisitions and continued investments for growth.
Performance Materials and Technologies
Sales were up 6 percent to $2.6 billion compared with $2.5 billion in the second quarter of 2013, driven by UOP catalyst and gas processing growth and higher sales in Advanced Materials, particularly Fluorine Products. Segment profit was up 8 percent to $475 million (2013: $438 million) and segment margins increased 30 bps to 18.0 percent, driven by productivity net of inflation and higher volume, partially offset by price/raw headwinds in Resins & Chemicals, unfavorable UOP catalyst shipment mix versus the prior year, and continued investments for growth.
Transportation Systems
Sales were up 8 percent to $1.0 billion (2013: $947 million) reported, 4 percent organic, compared with the second quarter of 2013, driven by continued growth from new platform launches, higher global automotive production, and increased commercial vehicle demand in Europe. Segment profit was up 33 percent to $267 million (2013: $126 million) and segment margins increased 310 bps to 16.4 percent primarily driven by strong Turbo productivity and volume leverage, and operational improvements.
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