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Honeywell's Industrial Automation Unit Hit by Weak Sales: Recovery Ahead?

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Key Takeaways

  • HON's Industrial Automation revenues fell 5% in Q2 2025 on project slowdowns.
  • Warehouse solutions sales dropped 4%, while productivity solutions fell 7%.
  • Organic sales in Industrial Automation seen down low to mid-single digits in 2025.

Honeywell International Inc. (HON - Free Report) has been witnessing persistent weakness in the Industrial Automation segment. In the second quarter of 2025, revenues from the segment declined 5% on a year-over-year basis. Softness in the productivity solutions and services business, owing to project slowdown, remains a concern for the segment.

Sales from the warehouse and workflow solutions business declined 4% year over year, owing to the timing of large project execution. The Productivity solutions and services unit also witnessed 7% sales decline, largely due to the challenging demand environment in Europe. 

Within the Industrial Automation segment, sales from the products group fell 7.4% in the second quarter, while those from the services group remained relatively stable. Softness in the industrial market due to a slowdown in the overall manufacturing sector might impede the segment’s growth in the near term. For 2025, it anticipates that the Industrial Automation segment’s organic sales will decline in the low to mid-single digit range.

Nevertheless, strength in the commercial aviation and building automation businesses augurs well for Honeywell. The Aerospace segment is particularly strong, driven by strength in the defense business and growth in air transport flight hours.

Business Performance of HON's Peers

GE Aerospace (GE - Free Report) is gaining from strong demand for LEAP, GEnx & GE9X engines and services within the Commercial Engines & Services business. The Commercial Engines & Services business’ revenues and orders jumped 30% and 28%, respectively, on a year-over-year basis in the second quarter. GE Aerospace’s growth is also supported by increasing air traffic, fleet renewal and expansion activities. During the second quarter of 2025, GE Aerospace inked a deal with Qatar Airways to supply more than 400 GE9X and GEnx engines.

Another peer, 3M Company (MMM - Free Report) , has been witnessing solid momentum in the Safety and Industrial segment, driven by strength in personal safety, roofing granules, industrial adhesives and tapes, abrasives and electrical markets. Stable demand for 3M’s electrical infrastructure products, like medium voltage cable accessories and insulation tapes, augurs well for the segment in the quarters ahead. Organic sales from 3M’s Safety and Industrial segment grew 2.5% year over year in the first six months of 2025.

HON's Price Performance, Valuation and Estimates

Shares of Honeywell have gained 2.3% in the past six months compared with the industry’s growth of 0.6%.

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From a valuation standpoint, HON is trading at a forward price-to-earnings ratio of 19.59X, above the industry’s average of 16.42X. Honeywell carries a Value Score of D.

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The Zacks Consensus Estimate for HON’s 2025 earnings has been on the rise over the past 60 days.

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Honeywell currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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