Honeywell recently hosted its annual investor day at its US headquarters in Morris Plains, New Jersey, which focused on driving organic growth acceleration, continuous margin expansion and cash flow improvement.
In the latest equity research by Jeffries, it is reported that Honeywell expects mid-to-high single digit growth from China with up to 20% from India. HON is targeting 20% of sales from software in 2019 with sales accounting for 15% in 2018 up from 5% in the 2014-16 period.
Honeywell stated it was committed to 30-50 bps of improvement annually. The second phase of the company’s transformation process includes supply chain management, connectivity, and software solutions.
Honeywell laid out a path to 23% margins from a range of 20.7-21.0%, at present.
The group said that its organic revenues grew 4% in 2020 led by aerospace (up 6%) and safety and productivity solutions (up 5%).
Segment margins of 21.7% up from 21% in 2019 with margin expansion across all four segments.
For commercial original equipment, Jeffries forecast the business to grow at a 5% rate in 2019, driven by higher business jet demand and large commercial deliveries. The business expanded at an 11% organic rate in 2018 (14% total) driven by these same trends.
For commercial aftermarket, Jeffries expects growth to be well supported by an ongoing upgrade cycle to support ADS-B; in total, analysts expect the commercial aftermarket to expand 6%, up from 5% growth in 2018.
Ongoing growth is also supported by air traffic and ongoing expansion of the business jet fleet.
