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.

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

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%.

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.

Latest articles

The Federal Reserve meeting is scheduled for September 17-18. At its last policy meeting in July, the Fed lowered rates by 25 basis points.

On September 14, drones attacked Saudi Arabia Aramco's oil-infrastructure. Saudi Arabia's oil production has fallen by 50%.

Apple Arcade (AAPL) is a subscription gaming service that was unveiled at Apple’s annual event last week. The service will launch on September 19.

Cannabis legalization is gaining traction not only in the US but also globally. The third presidential Democratic debate was held on September 12.

Google has agreed to make a one-time settlement of over $945 million euros to the French ministry. The ministry accused Google of evading taxes.

In Q4 2018, legendary investor George Soros sold all his holding in Apple (AAPL). In Q3 2018, Apple represented around 0.2% of his total portfolio.