Honeywell International: Company Strategy & Performance Analysis
Honeywell International (Honeywell) is one of the leading MRO and aerospace players in the world. Its aerospace unit was established in 1936 and since then has established itself as a pioneer in the field of MRO and aerospace. The company’s Aerospace segment provides products, software, and services to aircraft in a variety of end markets such as air transport, regional, business and general aviation aircraft, and airlines. Some of its products include aircraft engines, systems and service solutions, integrated avionics, and related products and services for aircraft manufacturers. It also provides spare parts, repair, overhaul and maintenance services for the aftermarket. The company operates in the US, Asia-Pacific, Europe, the Middle East and Africa. Honeywell is headquartered at Morris Plains, New Jersey, the US.
MarketLine Premium’s company strategy reports provide in-depth coverage of the performance and strategies of the world’s leading MRO companies. The report details company operations in key geographies and offers a comprehensive analysis of each firm’s growth strategy and financial performance. The reports benchmark company performance via key indicators, including order, order backlog, operating expense, operating income, net income, MRO andrevenue.
Strong Order backlog to drive future growth
The company’s order backlog stood at US$19.0 billion in 2016, registering a growth of 4.9% from US$18.1 billion in 2015. Overall, the company’s backlog grew at 11.9% CAGR from US$12.1 billion in 2012 to US$19.0 billion in 2016. The growth in the order backlog is attributed to the various new MRO and supply contracts with Jet Airways, KLM Engineering and Maintenance, VietJet and Hainan Airways
The segment benefitted from inorganic growth from acquisitions
The aerospace segment revenue declined from US$15.2 billion in 2015 to US$14.7 billion in 2016, a decline of -3.1%. The decline in the revenue can be primarily attributed to higher incentives paid to original equipment manufacturers, a decline in organic sales volumes, and the divestiture of Honeywell Technology Solutions Inc. This was partially offset by growth from acquisitions. Commercial aftermarket sales increased by 3%, primarily due to the increased repair and overhaul activities, and increased spare shipments.
Honeywell’s MRO revenue increased due to increased after-market sales
Honeywell’s MRO revenue registered growth of 2.9% from US$4,656.0 million in 2015 to US$4,796.0 million in 2016. The increase in the MRO revenue is primarily attributed to high commercial aftermarket sales due to increasing demand from countries such as China and India, which have been steadily increasing their fleet sizes. The launch of innovative MRO services such as the Honeywell Connected Maintenance System and the GoDirect maintenance program contributed to the growth in revenue. The company is looking to expand in emerging countries such as Malaysia, in order to remain competitive in the market.
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