Dive Brief:
- Honeywell’s Building Technologies’ sales were down 1% year over year in the fourth quarter of 2023, with lower volume-based declines of fire and security offerings offsetting a 6% year-over-year organic growth in its building solutions, according to the company’s Q4 2023 earnings.
- Management said that a continued strength in its projects and services, along with strong execution and “past due backlog burndowns,” drove organic building solutions growth in the fourth quarter. The company reported that its segment margin contracted 90 basis points to 23.9%, attributing the decline to cost inflation and mixed headwinds that partially offset productivity actions.
- Honeywell’s backlog continued to grow, up 8% year over year to 31.8 billion. Order growth in building products also factored into a 1% increase in orders during the quarter, Honeywell Chief Financial Officer Greg Lewis said on the company’s Feb. 1 earnings call, noting that “this setup gives us confidence in our 2024 outlook.”
Dive Insight:
For the full 2023 fiscal year results, organic sales for Honeywell’s building technologies segment rose 2% to over $6 billion, led by strong projects and services and year-over-year increases in fire products, despite short cycle headwinds. Price and cost management, along with productivity actions, also contributed to a 25% increase in its segment margin, according to the firm’s earnings presentation.
The CFO added that the company expects to see the long-cycle businesses of its building automation segment outpace its short-cycle portfolio, particularly in early 2024. The timing of short-cycle recovery will be one of the key drivers of performance this year, likely leading to strong results in the second half, Lewis said. He added that a robust backlog and favorable momentum from aftermarket services will facilitate the growth of building projects and services.
Lewis noted that orders for Honeywell’s safety and productivity solutions segment decreased 24% organically in the quarter, primarily due to lower volumes, warehouse and workflow solutions, and productivity solutions and services. For the full year, orders in the segment dropped 20% on an organic basis, according to the earnings presentation. Lewis said that while the projects’ portion of Honeywell’s Intelligrated industrial workflow automation business remains around trough levels due to subdued investments in warehouse automation, its pipeline of new projects is robust and positioned for an eventual recovery.
Lewis said that a 4% organic growth in sales for its performance materials and technologies segment was driven by continued strength in life cycle services and smart energy solutions. “Our sustainable technology solutions business finished the year with over 30% sales and orders growth in the fourth quarter,” he said on the earnings call.
The company reported that Honeywell Connected Enterprise offerings, spanning industrial, cyber, buildings, life sciences and aircraft segments, climbed over 20% in the quarter.
Separately, the company announced that it has elected CEO Vimal Kapur to replace Darius Adamczyk as chairman of the board and appointed William Ayer as an independent lead director. Kapur and Ayer will assume their new roles in June and May, respectively.
