Honeywell Grows Faster Than Its Markets
Honeywell International (HON 53) is one of the companies we like to use for benchmarking our industry. It’s a controls company, and it’s an exceptionally well run company. HON released financial guidance and held their investor conference call on December 15. Here’s what we learned…
On December 15, Honeywell released very positive guidance, even as it addressed the potential for a global slowdown.
http://investor.honeywell.com/phoenix.zhtml?c=94774&p=irol-newsArticle&ID=1640010&highlight=
The Numbers
Honeywell reaffirmed its 2011 full-year guidance, expecting sales of approximately $36.5 billion, up 13% over 2010. Sales for 2012 are projected to increase another 4% – 7% to $38 or $39 billion.
The big areas of strength: Aerospace. Energy. Safety and Security. There are more.
The Strategy
In a recent interview with Jim Cramer, CEO Dave Cote emphasized diversity of business and opportunity. He said, “We like to be on both sides of things, and on all platforms.”
For example, Honeywell is not just in energy efficiency. It is also in energy generation.
“We try to be in everything, because you just can’t predict how things are going to go.”
Regarding the boom in aircraft orders… “We are in all aircrafts.”
Regarding Turbo… “We used to be focused on just diesel engines.” Now, jet engine and turbochargers are together, creating new efficiencies in gas, compressed natural gas, and very small turbos. Turbochargers focus on fuel economy, performance and emissions control.
Regarding repressive governmental regulations… Regulations create demands on technology in order to comply. Safety and security products are very big for Honeywell.
The overall strategy… “Seed plant.” Think and act three to five years ahead of events. Emerging regions. Long cycle vs. short cycle. Avoid cyclicality. Don’t get crushed by down cycles.
“While key economic indicators show slower year-over-year growth in GDP and industrial production globally, we expect to grow faster than the end markets we serve…”
Economy 2012
Mr. Cote believes the 2012 economy is in the hands of “Government in Europe and Government in the U.S.”
“The biggest hold up is government and their approach to debt. Fix it,” he said, “and they would be amazed at the kind of recovery we would have.”