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Honeywell’s Performance Materials and Technologies Revenue Grows

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Performance Materials and Technologies in 1Q18

Honeywell International’s (HON) PMT (Performance Materials and Technologies) segment accounted for 24.4% of its total revenue in 1Q18, compared with 24.8% in 1Q17, representing a difference of 0.40 percentage points YoY (year-over-year). Between 1Q17 and 1Q18, PMT’s revenue rose 7.7%, from $2.4 billion to $2.5 billion.

The segment’s growth was fueled by 3% organic growth due to short-cycle demand in process solutions resulting from an increase in new orders in 1Q18. Foreign currency translation added 5% to the segment’s growth. Within this segment, the Honeywell UOP business grew 6%, driven by the addition of new clients. The Solstice business continued to grow strongly, and the Process Solutions business grew 15%, backed by an increase in smart energy, thermal solutions, and maintenance and migration services.

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Net income and margins

In 1Q18, the PMT segment’s net income rose 7.5% YoY to $519.0 million from $483.0 million due to foreign currency exchange. However, an unfavorable mix resulted in the segment’s margin staying at 20.5% in 1Q18.

Outlook

The segment’s revenue is expected to grow, driven by UOP, Solstice, and foreign currency exchange. Backlogs from 1Q18 could drive the process solutions business.

For indirect exposure to Honeywell, investors could consider the iShares Edge MSCI Multifactor Industrials ETF (INDF), which has invested 2.6% of its portfolio in Honeywell. The fund’s other holdings include General Electric (GE), Boeing (BA), and 3M (MMM), which had weights of 3.8%, 5.5%, and 3.7%, respectively, as of April 20.

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