Honeywell Reports $1.467 Billion Net Income in Q1 2025, Plans Business Spin-Offs

Honeywell International Inc. reported a net income of $1.467 billion for the first quarter of 2025, slightly down from $1.475 billion in the same period last year. The company's earnings per share remained stable at $2.24 for basic shares, while diluted earnings per share decreased marginally to $2.22 from $2.23. Total net sales increased by 7.9% to $9.822 billion, compared to $9.105 billion in the prior year, driven by a combination of higher product and service sales, which rose to $6.645 billion and $3.177 billion, respectively.

The company experienced notable changes in its financial performance, with a 15% increase in product sales and a 12% increase in service sales compared to the previous fiscal period. Honeywell's gross margin decreased slightly to 38.5% from 38.7%, attributed to higher costs associated with recent acquisitions and increased material and labor costs. The total costs and expenses rose to $7.938 billion, up from $7.234 billion in the prior year, primarily due to incremental costs from acquisitions and higher direct and indirect material costs.

Strategically, Honeywell announced its intention to spin off its Advanced Materials business into a standalone publicly traded company, Solstice Advanced Materials, targeted for completion by the end of 2025 or early 2026. Additionally, the company plans to separate its Automation and Aerospace Technologies businesses into independent entities by the second half of 2026. These strategic moves are part of Honeywell's ongoing efforts to streamline operations and enhance shareholder value. The company also agreed to acquire Sundyne for $2.16 billion, further expanding its Energy and Sustainability Solutions segment.

Operationally, Honeywell's backlog of orders increased by 13% to $36.1 billion as of March 31, 2025, indicating strong demand across its business segments. The Aerospace Technologies segment reported a significant increase in sales, driven by higher volumes in commercial aviation and defense. However, the Industrial Automation segment faced challenges, with a 4% decline in net sales due to lower demand for personal protective equipment and unfavorable foreign currency translation effects. The company’s employee headcount was reduced by 713 positions as part of its ongoing productivity and functional transformation initiatives.

Looking ahead, Honeywell remains cautious about macroeconomic conditions, including rising trade tensions and inflationary pressures, which could impact future performance. The company is focused on executing its strategic initiatives while managing operational costs and maintaining strong relationships with suppliers to mitigate potential supply chain disruptions. Honeywell's management anticipates that its operating cash flows will be sufficient to meet future cash needs, supported by its robust liquidity position and access to capital markets.