Safety and Productivity Solutions in Q3 2018
Honeywell International’s (HON) SPS (Safety and Productivity Solutions) segment is the smallest but fastest-growing segment. In the third quarter of 2018, its contribution to HON’s total revenue expanded to 14.6% from 14% in the previous year. It reported revenue of $1.57 billion compared to $1.41 billion in Q3 2017. That implies a revenue growth of 11.4%.
The segment’s revenue growth was primarily driven by its Intelligrated business, which grew 15% in the third quarter. The increase was due to large order execution in the first half of the year. Sensing and safety products also had volume growth and pushed the segment’s revenue. The new product launch also drove up the segment’s revenue.
Net income and margins
In Q3 2018, the SPS segment’s net income rose an impressive 23% YoY (year-over-year) to $262 million from $213 million, driven by higher volumes, commercial strength, and productivity. Since the segment’s net income growth outpaced its revenue growth, its margins also expanded 150 basis points YoY to 16.6% from 15.1%.
The organic growth of Intelligrated will be the key factor in the segment’s revenue growth. Continued productivity initiatives and volume growth will help improve the segment’s margin.
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