SCOTTSDALE, Ariz. — For Honeywell Aerospace CEO Jim Currier, it’s time to show investors what his company can do as a standalone business.
“We have a dedicated management team that is focused on just one strategy, one mission, as opposed to the different missions of a conglomerate,” Currier told CNBC at his company’s investor day.
When Honeywell Aerospace officially separates from its parent company later this month, it will aggressively advance its advantages in a host of technologies, including avionics, engine control systems, and the nose-to-tail of commercial aircraft, business jets, and military aircraft.
It is expected to accelerate growth.
As a standalone company, Honeywell Aerospace expects full-year 2026 adjusted earnings before interest and taxes to be in the range of $4.65 billion to $4.75 billion, and free cash flow in the second half of the year to be in the range of $1.0 billion to $1.5 billion.
Honeywell is targeting annual revenue of at least $6.5 billion and annual free cash flow of at least $4 billion by 2030.
“The biggest growth for us is occurring in the commercial transportation market and the defense and space sector,” Currier said Wednesday. “We have an opportunity to be well-positioned with our products and technology.”
Currier added that Honeywell is “recording” a backlog of orders from the United States. airbus and boeing.
Why separate Honeywell?
as part of honeywell international Over the past decades, the aerospace sector has become one of the largest manufacturers and suppliers in the civil and business aviation markets, as well as in the defense industry.
From flight management systems in the cockpit to engine controls under the wings to auxiliary power units in the tail, its technology and components are installed in thousands of aircraft.
Last year, the business generated more than $4.2 billion in profits at a profit margin of 24.5%.
However, these results failed to impress investors. That’s because the overall results for the past few years have been clouded by Honeywell, a conglomerate that has struggled to generate the equity returns enjoyed by the market and its competitors.
Since June 2023, Honeywell stock has increased about 20%. S&P500 You will get a profit of about 77%.
This poor performance is the main reason why Honeywell ultimately decided to split its business into three companies in 2024. Solstice Advanced Materials, Honeywell Technologies and Honeywell Aerospace.
“Basically, on the other side of the separation…each business is very well positioned in the services market,” Honeywell CEO Bimal Kapur told CNBC last month.
Convert aerospace skeptics
For investors, Honeywell Aerospace is a company purely focused on growing the commercial aviation and defense industries.
Focus on aviation and defense paid off GE Aerospace, The company’s stock price has risen about 125% since becoming an independent company in April 2024, easily outperforming the S&P 500 (up about 45% over the same period) and Honeywell, which is up about 20%.
Currie believes Honeywell Aerospace has the team and technology to take advantage of the continued demand for air travel expected around the world.
The company aims to achieve underlying annual sales growth of 6% to 8% and annual profit growth of 9% by 2030.
While Currier is optimistic about earnings growth as a standalone company, Honeywell Aerospace faced a number of questions in the first quarter about recent challenges with key suppliers.
The temporary issues were related to the Middle East war, which weighed on the engine and control systems divisions in January and February, the company said.
Honeywell Aerospace executives have since said issues with some suppliers have been fixed.
Nevertheless, analysts will likely look to Mr. Currier for a deeper understanding of the state of Honeywell Aerospace’s supply chain.
“Bottom line: This is an opportunity for management to convert generally skeptical aerospace experts,” Wolf Research analyst Nigel Coe said in a recent note.
—CNBC’s Michael Bloom contributed to this report.
