It is the last day of May. Remember back a couple of weeks ago, the Dow Jones Industrial Average book forty thousand. It's also up sixteen percent over the year. Now one of its major components, though Honeywell makes up about three point four percent of the index, is lagging
despite delivering solid numbers every quarter. Romaine and I caught up with its CEO, Vima Kopor, who is celebrating his one year anniversary in the post on Saturday, and we started by asking him there are three businesses, automation, energy and aerospace still fit together.
My near time priority is deliver the results. We have an earnings guide. We meet or beat it so that gives us the right to play, continue to evolve our portfolio, but also be open for all the options. I mean, my job as the CEO is make sure that we drive the shareholders earnings. That's that's what they really stand here for. But near term, we have a strong operating system, strong strategy, and I feel convicted we are on the right track.
As you know, there are a lot of investors, activists, investors who of course have looked at the model and least in their minds sting they have a better feel for it. I've heard you, I've heard your CFO as well as other executives at Honeywell talk about this idea that you yourself are your own activists investor kind of explain that.
It's like you always look at it. Are we creating value collectively? And ask that question frequently enough and don't wait for an activist to show up, Ask that question, present that productivity to the board and see what the answer is, and whatever the answer is, run company towards that versus trying to wait for any other scenario. That's what we really mean. Why we are our own activists.
So if you were your own activists and looking at your stock price versus your peers, what would you tell yourself because it's underperformed? And the question for many analysts is for no reason? Because you deliver. You got the margins, you got the growth, you got the earnings, So what.
Gives Obviously, I mean, being in this job for a year, it's certainly a disappointment, I would say, But what we are working is to deliver our commitment for this year. And I'm confident that as we delivered our earnings a year progresses will certainly get the valuation, what we are looking forward to.
There's also a conversation that the moves that you're doing in terms of divesting some assets that aren't on core and making some acquisitions like you did a carrier for example, almost five billion, they're.
Just not enough.
They're not sexy enough, they're bolt on. You need like something transformational. When you say to that, I would.
Say that, given we have three compelling trends on which we are aligned to, I don't see a need to add one more transformation. That to me is a stretch argument by making it too general. The question remains valid. What's the next big move in automation, what's the mess
moo move in aerospace? Absolutely, and that's why I really work every year, every day to make sure that what can we do organically and what can we do inorganically, And you can expect us to do a lot of work towards that as the time passes by this year
and next year. I'm excited about in organic opportunities in each of the three spaces, and our pipeline is much stronger than it has ever been before, and I do expect that we should be able to announce the right deals during the course of this year, and that will be the true test set that we're really executing our strategy and we don't need a transformational deal.
Is that primarily going to be acquisitions? Are there also divestagers that you're also considering.
Some divests too? I mean, you know, if I have to truly live to my word of the three mega trends, there are parts of our portfolio which don't fit well, and we'll slowly divest them. The reason we have not been public is the best interest of our shareholders because by making it public, we won't get the value at the exit point. But it doesn't mean internally we're not doing the work. We are doing the work, and I think it will unfold as the time passes by.
I do want to get your thoughts on the automation business. Investors have been a little bit concerned about how that's like the other two major units that you have. I mean, we are at a time a pretty tremendous structural change in our economy, structural changes that I think would be a pretty big tailwan for the automation sector. Why have we not seen that show work yet in Honeywells results?
Look over our businesses, I would say The near term results are combination of our automation business, which is short cycle and long cycle. The long cycle portions of automation are doing well because people are building long term capacity on different end markets. The short cycle is still recovering from the COVID cycle, which can look awkward to say, you've been four years and you're still talking about COVID.
But the stalking impacts the distribution distributors is still playing out and that's a large portion of our automation business, and that negatively impacts the numbers at this point. But we are confident as a year is progressing. Every quarter we are doing better than the previous quarter, and that's our you know, the Rubrik for twenty twenty four. That sequentially, we keep improving short cycle every quarter and we have a strong exit and end of the year which positions
us very well for twenty twenty five. So I'm very confident this is going. This is if or when we exactly know the different businesses and different cycle they are and when they are going to see recovery. And we see recovery in many of the businesses already, but it's not all in because it's not a switch. We have multiple businesses and multiple end markets. Therefore, it is going to be sequenced over a timeline.
So the warehouse automation part, you are one hundred percent committed to.
It absolutely today we are absolutely committed to it. It's a critical need of improving worker efficiency or labor shortages. So this is not about debate of is it a good sector or bad sector. Fundamentally, the value proposition is very strong. It went through the capacity built and overbuilt during the COVID cycle because everybody put too much of bet on e commerce and overbuilt it. So it's going through some correction. So they are the correction pains we
saw in twenty three. We're probably going to experience this twenty four. But if I take a five or ten year view, clearly there is a clear value proposition on why people invest in it because it gives productivity.
To them, which leads us back just to inorganic growth is what you were talking about and seeing opportunities there. Next year, you're looking at selling that quantum computing business and that could fetch as much as five billion or even more. Right, that's a.
Nice hefty sum.
It is what do you want to buy so you don't have to have a huge transformational deal. But what is on your.
Shopping So our shopping list is bolt on acquisitions because you want to be thoughtful on how you want to progress your strategy in each of these three mega trends, and the boldt on acquisition to me is something which attaches with your current business, takes you to an adjacency, and compounds the growth of that business by itself. The acquisition we made on Compressive Control last year, that was an acquisition into our automation business. It's a bolt on
to that. The acquisition we made for our career is a boilt on to our building automation business. We acquire Cibit navin Itally, the acquisition get completing course of the year is a bolt on to our aerospace business. If you see that trend line, we are very purposeful to do the boltons and we stay on course for three of our mega trends, so we are not doing some random things which makes no sense. Everything you will see moving forward will following the same trend line.
Is that going to be enough to get your growth engine really started?
Absolutely?
I mean when when is that growth engine going to rev up? Hardcore?
Look, our commitment to our shareholder is eight to twelve person earnings growth every year. And what I need to work on is when you look at it five years or greater horizon, are we capable of delivering that every year, year on year. And so I look at organic growth and in organic growth in combination of that and are readily prepared for, you know, preferably double digit earnings growth. That's what I'm here for.
That was Honeywell CEO Vima Kaporg