Honeywell’s Performance Materials and Technologies segment in 2Q17
Honeywell International’s (HON) Performance Materials and Technologies (PMT) segment is the third-largest revenue contributor to the company’s overall revenue. The segment accounted for 22.2% of HON’s total revenue in 2Q17, compared to 24.4% in 2Q16. The segment reported revenue of $2.2 billion in 2Q17, a 7.8% fall on a year-over-year basis. In 2Q16, the segment reported revenue of $2.4 billion.
The fall in the segment’s revenue was primarily driven by the spin-off of the resins and chemicals business, which is now listed as AdvanSix (ASIX). Honeywell’s UOP business witnessed good growth due to new business deals. Solstice, its low-global-warming product lineup, witnessed double-digit growth. But Honeywell Process Solutions fell due to lower volumes.
Net income and margin
The PMT segment’s net income for 2Q17 was reported at $524.0 million, a marginal rise of 0.80% on a year-over-year basis. In 2Q16, the segment’s net income was $520.0 million. The increase in net income was primarily driven by productivity and the segment’s lower cost of goods sold (or COGS). PMT’s COGS stood at $1.4 billion in 2Q17, representing 63.4% of sales. In 2Q16, COGS stood at 66.3%, a gain of 285 basis points on a year-over-year basis. As a result, the segment’s margin improved with a net income margin of 23.4% during the quarter. In 2Q16, the margin was 21.4%.
The spin-off of the resin and chemicals business will continue to adversely impact the PMT segment’s revenue. Growth for Solstice is expected to continue, and a backlog growth could contribute to increasing revenue. Productivity gains will help the segment post higher income.
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