Honeywell Chairman and CEO Dave Cote reaffirmed the company's first quarter and full-year 2014 outlook in a CNBC Squawk Box interview on Wednesday, ahead of the company's annual investor conference. Cote also discussed his perspective on the need for America to stay globally competitive and outlined the components of Honeywell’s newly released five-year plan.
“There’s this global economic phenomenon going on now and it’s called China,” said Cote. “You have high-growth regions – think of it as what people used to think of as emerging markets. Today, it’s about a third of the global economy. In the next twenty years, it’s going to become half. We’re in this economic Olympics, feeling like we’re competing with the other Americans as opposed to competing with all these other countries. We need to start changing how we think about this stuff.”
“There’s a lot of excitement about this year’s five-year plan, which you’ll see is double-digit growth in a continued slow-growth economy,” Cote explained. “You’ll continue to see us drive high-growth regions and you’ll see us focus even more on software. At Honeywell we have about 22,000 engineers and more than half of them do software. So even when you think about turbochargers and jet engines – there’s a big software component to it. As a result of that, along with the cash deployment we’ve built up, we’re going to generate about $30 billion worth of cash over the next five years. When you deploy that cash – a lot of it hopefully into M&A – it could generate some very good returns.”
Honeywell held its annual investor conference in New York City today to outline its new five year targets (2014-2018) and discuss its continued outperformance and growth strategy. The company expects 2018 sales to increase organically $7-$12 billion to $46-$51 billion and segment margins to increase 220-370 bps over 2013 levels to 18.5-20.0%. It also expects to deliver on its previous five-year targets ending this year.
Honeywell User Experience (HUE), a new approach to the design and development of new products and services, was also introduced at the investor conference. HUE starts with the customer experience and deploys rapid prototyping and other design principles that enable faster cycle time and lead to increased customer value and loyalty.
"HUE is another tool for the company to drive higher organic growth, leverage Honeywell's process enablers and build on the 'One Honeywell' culture,” Cote explained. “HUE makes Honeywell's products and services easier to use, more intuitive, more efficient, and more productive. As we continue to embed more software into our products and services and use software to improve our product development process, we also continue to expand our capabilities."
"We're very proud of what we've been able to accomplish and even more excited about where all the seed planting is going to take us," concluded Cote. "Our expansion in key high growth regions and ability to localize our capabilities is another great example of how we'll drive accelerated growth over the next 5 years. The maturity of our key process enablers – Honeywell Operating System, Velocity Product Development™, Functional Transformation, and now the Honeywell User Experience – makes the 'machinery' work better every day, enabling growth and margin expansion well into the future.”
Honeywell and NASA are celebrating 10 years of collaboration with FMA Live! Forces in Motion – a newly expanded, award-winning, hip-hop physics education program that inspires middle school students to learn and enjoy math and science. The show has been performed before more than 350,000 students at 933 middle schools in all 48 contiguous U.S. states, as well as in Mexico and Canada. The spring tour launches in Houston, TX this week.
While the U.S. has the world’s largest pool of scientists and engineers, that lead is declining. In recent world rankings from the National Science Board, the U.S. lagged in science and math performance with high school students showing below-average math skills and ranking 26th in the world.
“Like many technology-based companies, Honeywell is concerned that too few U.S. students possess the necessary math and science skills to compete for science, technology, engineering and math (STEM) jobs in the 21st-century,” said Tom Buckmaster, President, Honeywell Hometown Solutions. “When it comes to STEM areas of study, early access and understanding is crucial in helping get students on track for college and career success. The FMA Live! program is designed to do this – and to ultimately inspire future innovators with a teaching style that is modern, memorable and makes it fun for students.”
Honeywell has been selected as one of the “World’s Most Admired Companies” by Fortune magazine for 2014. For the eighth consecutive year, Honeywell ranked in a top spot (#5) within the Aerospace and Defense industry.
According to Fortune’s website, its survey partners at Hay Group started with about 1,400 companies: the Fortune 1,000—the 1,000 largest U.S. companies ranked by revenue and non-U.S. companies in Fortune’s Global 500 database with revenue of $10 billion or more. Hay then selected the 15 largest for each international industry and the 10 largest for each U.S. industry, surveying a total of 692 companies from 30 countries.
To create the 57 industry lists, Hay asked executives, directors, and analysts to rate companies in their industry on nine criteria, from investment value to social responsibility.
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Honeywell Aerospace announced the results of its 16th annual Turbine-Powered Civil Helicopter Purchase Outlook. Here are a few key findings:
4,800–5,500 new civilian helicopter deliveries expected during 2014–2018. Overall demand remains steady versus the 2013 five-year forecast, with large fleet operator requirements offsetting a moderate softening in new helicopter purchase plans.
Latin American purchase plans remain strongest in the world, with up to 32 percent of respondent fleets slated for turnover with a new helicopter replacement or addition.
Increased interest in medium twin-engine helicopters, as the second most popular product class. Approximately 33 percent of total survey participants planned to buy a new model of this type. The most frequently mentioned models were the AW139, AW169, Bell 412, EC145 and Sikorsky S-76 series helicopters.
The 2014 outlook presents a snapshot of the helicopter business at a point in time and reflects the current business and political environment. This year’s survey queried more than 1,000 chief pilots and flight department managers of companies operating 2,800 turbine and 290 piston helicopters worldwide.
2020 Women on Boards recognized Honeywell as a Winning Company for the year 2013. 2020 Women on Boards is a non-profit grassroots campaign committed to increasing the percentage of women who serve on public company boards to 20% or greater by the year 2020.
Executive Women of New Jersey, an organization local to Honeywell’s global headquarters, has awarded the company with its 2014 Corporate Board Gender Diversity Award. This award recognizes publicly-held companies headquartered in New Jersey with at least 3 women on their board.