Why HON’s Safety & Productivity Solutions Revenue Grew in Q2 2018



Safety & Productivity Solutions in Q2 2018

Honeywell International’s (HON) SPS (Safety & Productivity Solutions) segment is its smallest but fastest growing. In Q2 2018, its contribution to HON’s total revenue expanded YoY (year-over-year) to 14.8% from ~13.1%, rising YoY to $1.61 billion from $1.43 billion.

HON’s Intelligrated business grew by double digits (11%), driven by projects and services, growing demand for new mobility products, and higher industrial safety and retail volumes. Foreign currency boosted the segment’s revenue growth by 2%.

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Net income and margins

In Q2 2018, the SPS segment’s net income rose by an impressive 24.8% YoY to $267 million from $214 million, driven by higher volumes and commercial strength. As the segment’s operating income growth outpaced its revenue growth, its margin expanded by 150 basis points YoY to 16.5% from 15.0%.


The segment’s revenue is expected to grow due to project backlogs, new product launches, and double-digit growth in China and India. This growth is expected to improve the segment’s margin.

Investors seeking indirect exposure to Honeywell could consider the iShares Global Industrials ETF (EXI), which has invested 2.6% of its portfolio in Honeywell. The fund’s other holdings include 3M (MMM), General Electric (GE), and Boeing (BA), which had weights of 2.7%, 2.6%, and 4.4%, respectively, as of July 20.


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