Honeywell 2008 Full-Year Sales Up 6 Percent, Earnings Per Share Up 19 Percent; Reaffirms 2009 Earnings Per Share Outlook

MORRIS TOWNSHIP, N.J., January 30, 2009 — Honeywell (NYSE: HON) today announced full-year 2008 sales increased 6% to $36.6 billion from $34.6 billion in 2007. Earnings per share were up 19% to $3.76 versus $3.16 in the prior year. Cash flow from operations was $3.8 billion and free cash flow (cash flow from operations less capital expenditures), excluding cash taxes relating to the sale of the Consumables Solutions (CS) business, was $3.1 billion. Free cash flow conversion (free cash flow divided by net income) was 110% of net income for the full-year, excluding the CS taxes.

Fourth quarter sales were $8.7 billion versus $9.3 billion in 2007. Earnings per share were $0.97 versus $0.91 in the prior year fourth quarter. Cash flow from operations was $1.3 billion and excluding CS taxes, free cash flow was $1.1 billion. Fourth quarter free cash flow conversion was 155% of net income, excluding the CS taxes.

“Having great positions in good industries combined with strong execution drove Honeywell’s performance and growth in a tough 2008 economic environment,” said Honeywell Chairman and Chief Executive Officer Dave Cote. “Our key initiatives, including the Honeywell Operating System, Velocity Product Development and Functional Transformation, are working, and we’re a much stronger company today because of their ongoing global implementation. In 2008, we were awarded large multi-year contracts and continued to be a strong cash generator. We also made acquisitions to bolster our portfolio, completed meaningful share repurchases, and increased the dividend rate.”

“2009 will be a more challenging year,” concluded Cote. “However, the actions we’ve taken over the past several years will benefit us in this economic downturn and have made Honeywell a more efficient, innovative, and productive company. We are well positioned and confident in our ability to outperform in 2009 and over the long-term.”

Honeywell also reaffirmed its previously stated 2009 earnings per share guidance of $3.20-3.55.

Fourth Quarter Segment Highlights

Aerospace

• Sales declined 1%, compared with the fourth quarter of 2007, as a result of a net decrease from acquisitions and divestitures (primarily the sale of the Consumables Solutions business), partially offset by strong sales to Business and General Aviation Original Equipment customers. Sales, excluding the impact of acquisitions and divestitures, were up 2%.
• Segment profit grew 1%, while segment margin increased by 40 bps to 19.2%, driven by sales mix, partially offset by inflation.
• Honeywell was selected to provide main engine propulsion, auxiliary power unit, environmental system and cabin pressurization equipment and aircraft lighting for the new Gulfstream G250 business aircraft in an agreement valued at more than $4 billion over the life of the program (including aftermarket).
• Honeywell received a $65 million production contract for its Micro Air Vehicle, known as the T-Hawk™, from the U.S. military. Deliveries of 90 systems will begin in the second quarter of 2009 and conclude in December 2009. The autonomous vehicle, weighing 17 pounds and measuring 14 inches in diameter, can fly to inspect hazardous areas for threats without exposing warfighters to enemy fire.
• Honeywell was awarded a $52 million contract to deliver F124-GA-200 engines to Alenia Aermacchi, a Finmeccanica Company, for the production of the Advanced Jet Trainer M-346. The design and durability of this engine delivers unrivaled performance over other aircraft engines, enabling it to maintain specified thrust levels for a longer period of time.

Automation and Control Solutions

• Sales were up 3%, compared with the fourth quarter of 2007, with net growth from acquisitions and divestitures, offset by the unfavorable impact of foreign exchange.
• Segment profit grew 12%, while segment margin increased by 110 bps to 13.4%, driven by increased productivity, partially offset by inflation.
• Building Solutions was awarded an Indefinite Delivery Indefinite Quantity Energy Savings Performance Contract (ESPC) by the U.S. Department of Energy, which allows Honeywell to implement up to $5 billion of energy efficiency, renewable energy and water conservation projects at federally owned buildings and facilities globally over the next 10 years.
• Process Solutions announced an $11 million contract to provide process control hardware and software to Nuon’s Magnum plant, a 1,300 megawatt combined-cycle power station under construction in Eemshaven, Netherlands. The Magnum plant will use Honeywell’s Experion® Process Knowledge System to monitor and control the state-of-the-art power station and Honeywell’s Safety Manager system to establish safety practices such as process and
emergency shutdowns, equipment protection, and fire and gas monitoring.
• Honeywell signed Public-Private Partnership (P3) contracts for 18 new schools in Alberta, Canada and a new hospital in Woodstock, Ontario. The projects include the design and installation of building automation, security, and life safety systems and management of the performance and maintenance of the facilities over the course of the 30-year contracts.

Transportation Systems

• Sales declined 35% compared with the fourth quarter of 2007, due to lower volumes and the unfavorable impact of foreign exchange.
• Segment profit was down 96% primarily due to volume declines and inflation.
• Turbo Technologies was awarded contracts expected to total more than $90 million over the life of the programs. The programs awarded were for both passenger and commercial vehicle platforms using Honeywell’s performance-enhancing, emission-compliant technologies including the latest Variable Nozzle Turbine (VNT) technology. The applications range from 1.7L passenger vehicle engines to large 7L commercial vehicle engines on models in Europe and Japan

Specialty Materials

• Sales declined 12% compared with the fourth quarter of 2007, due to lower volumes and the unfavorable impact of foreign exchange.
• Segment profit was down 16% due to volume declines and inflation.
• UOP’s process technology helped develop second-generation biofuels used by Air New Zealand, Japan Airlines and Continental Airlines, which each successfully completed demonstration flights using this new alternative fuel.
• Advanced Fibers and Composites announced that its high-strength Spectra fiber is now being used in industrial slings for offshore oil and gas exploration and has also expanded its line of Spectra Shield II ballistic material for body and vehicle armor.

Dave Cote Introduces President Obama at White House Media Briefing on U.S. Recovery Plan

Chairman and CEO Dave Cote introduced President Barack Obama at a media briefing on Wednesday morning after meeting with the President and 12 other CEOs at the White House in support of the proposed U.S. Reinvestment and Recovery Plan.

“Now is not the time for our country to be timid,” Cote said. “We need to get this thing done. The business community has great confidence in our President to provide the direction and the leadership that is needed in these tough times to make it happen. But he can’t do it alone…all of us have to help. As for Honeywell, you can count on us and all of our employees to be there to help support this.”

President Obama said, “These are people who make things, who hire people. They are on the front lines in seeing the enormous problems in our economy right now. Their ideas and their concerns have helped to shape our recovery package, and I’m grateful that they’re here today to talk about why it’s so important that we act, and act swiftly, in order to get this economy back on track.”

The House of Representatives is expected to vote on the $825 billion package on Wednesday. The meeting was part of Obama’s effort to appeal to GOP critics and big business. “I’m confident we’re going to get it passed,” Obama told reporters.

“We are very supportive of the Reinvestment and Recovery Plan,” said Cote. “Our message would be it needs to get done fast. Getting money out fast to people who will spend it…and investment in the future of the country, whether its infrastructure, energy efficiency, math and science…all these things need to happen,” said Cote. “There are great strides that we can make in this country in energy efficiency, there are a number of solutions out there that are possible and we just need to encourage people to do it. It improves our energy security and just makes sense.”

Cote also stated that the U.S. is in desperate need of engineers, and stressed the importance of investing in math and science education.

Other CEOs who attended the meeting with President Obama included Steve Appleton, Micron Technology Inc.; David Barger, JetBlue Airways Corp.; Greg Brown, Motorola Inc.; John Bryson, Edison International; Debra Lee, BET Holdings Inc.; Anne Mulcahy, Xerox Corp.; Sam Palmisano, International Business Machines Corp.; Antonio Perez, Eastman Kodak Co.; Eric Schmidt, Google Inc.; Michael Splinter, Applied Materials Inc.; Wendell Weeks, Corning Inc.; and Ron Williams, Aetna Inc.

Nearly half of Honeywell’s product portfolio is linked to energy efficiency. Simply by using the Honeywell technologies available in the marketplace today, the U.S. could reduce energy demand by 15 to 20 percent.

Metso supplied SC paper machine line runs a new speed record at Stora Enso Kvarnsveden

The Metso supplied PM 12 at Stora Enso Kvarnsveden mill in Sweden has improved the world speed record of SC paper production. The machine reached a 24-hour record of 1,926 m/min on January 21st. The top speed achieved during the period was amazing 2,009 m/min.

“This new record shows what can be achieved with the newest machine technology in the hands of highly skilled operating staff. It is also a result of the good co-operation between Metso and Stora Enso. We did not face any unexpected challenges during the record run, and we expect to break even this record in the near future”, states Annica Bresky, Production Manager of PM 12 at Stora Enso Kvarnsveden.

“The runnability was good and tail threading operated smoothly through the whole machine. Also reel turn-ups were without problems at the record speed”, adds Lennart Johansson, PM 12 Superintendent.
Kvarnsveden PM 12 was started up in November 2005. It is the largest SC paper production line in the world. PM 12 is one of the largest investments that Stora Enso has ever made in Europe, and the biggest ESS (extended scope of supply) paper mill project by Metso.

Stora Enso is an integrated paper, packaging and forest products company producing newsprint, magazine paper, fine paper, consumer board, industrial packaging and wood products. The Group has some 36 000 employees in more than 40 countries on five continents. Stora Enso has an annual production capacity of 13.1 million tonnes of paper and board and 7.5 million cubic meters of sawn wood products. www.storaenso.com/kvarnsveden

IPS Provides Qatargas with Major DCS Upgrade

ANUARY 22, 2009/LONDON – Invensys Process Systems (IPS), a global technology, software and consulting firm, today announced that it has signed a multi-million dollar contract with Qatargas, one of the world’s major producers of liquefied natural gas, to complete a major automation upgrade at the Qatar Gas 1 facility in the Qatar Ras Laffan Industrial City.

Under the terms of the contract, IPS will upgrade control processors, gateways, local area networks and network security with its Foxboro I/A Series® distributed control system (DCS) Version 8, including mesh architecture.

“Our goal is to keep our clients’ distributed control systems running at peak performance levels,” said Mohsen Sorour, IPS Business Development Manager. “Qatargas’ existing Foxboro I/A Series DCS system runs versions 6 and 7. IPS will migrate this nodebus-based system to our latest mesh-based technology, and by retaining existing field wiring and system cabinets and using online upgrade procedures, we can ensure that plant downtime is kept to an absolute minimum.”

The upgrade will give Qatargas improved compatibility between different generations of system components at Qatar Gas 1, as well as extend the lifecycle of the overall control system there.

“Because the upgrade will be carried out in phases, different generations of products and software will be able to interoperate as one system,” said Jambulingam Balu, Lead I&C Systems Engineer, Qatargas. “This approach ensures that we can budget for staggered investment cycles whilst extending the life cycle of the control system and in turn enhancing the plant’s performance.”

IPS Hosts Key Enterprise Integration Standards Meeting

JANUARY 27, 2009/PLANO, TEXAS – Invensys Process Systems (IPS), a global technology, software and consulting firm, today announced that it is hosting an international meeting of enterprise integration standards experts at its headquarters in Plano, Texas, January 27-30, 2009. At the annual review meeting, the SP95 Standards committee of the International Society of Automation (ISA) gathers with representative of the International Electrotechnical Commission (IEC) and International Organization for Standards (ISO) joint committees to develop global industry specifications for manufacturing operations management systems, including manufacturing execution systems (MES), laboratory information management systems (LIMS), warehouse management systems (WMS), and maintenance management systems (MMS).

The ISA 95 Standards for universal enterprise/control system integration have become the industry benchmark for integrating corporate IT systems with manufacturing and shop floor IT systems. In concert with the ISA 95 committee, the IEC and ISO groups are jointly developing the international version of the ISA 95 Standards.

“IPS is pleased to sponsor this important group meeting to further the integration of information and control systems within the enterprise,” said Don Clark, vice president of Global Industry Solutions for IPS and a long-time contributor to the ISA 95 Standards effort. “As a leader in integrated systems for overall business performance success, IPS is invested in methods and systems that make it easier for manufacturers to implement integrated systems and experience how improving plant or factory control can enhance their bottom line.”

The meeting will focus on standards for business-to-manufacturing transactions, key elements of enterprise integration. These standards define the business-level transactions that enable real-time exchange of critical manufacturing instructions and information between business logistics systems and shop floor control systems.

Emerson announces new Syncade™ smart operations management suite to help plants improve performance

odular, scalable Syncade suite improves efficiency, productivity, and compliance by integrating real-time intelligent plant floor data with operations decisions and workflow

Operator using Syncade Suite
The Syncade Suite’s intuitive interface enables easy adoption.

Syncade screen
Production information can be used to improve decisions.

Syncade architecture
The architecture provides comprehensive integration across the plant floor.

ISA95 structure
Syncade delivers ISA95 Level 3 standards-based functionality.

Syncade benefits
Syncade helps improve business performance.

Modular design of Syncade Suite
The Syncade family of software modules provide easy, flexible, integrated solutions.

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ORLANDO, Florida (February 2, 2008) — Emerson Process Management introduces Syncade™ Smart Operations Management suite, a new class of real-time production management software to improve plant operations. The modular, scalable Syncade Suite extends the value of PlantWeb® digital plant architecture by integrating real-time intelligent plant-floor data with procedural, off-line and transactional plant business processes, decisions and asset management.

The Smart Operations Management suite is an innovative replacement for the traditional client-server, program intense MES (Manufacturing Execution Systems) software of the past decade. By contrast, the Syncade suite uses the modular, scalable Microsoft.NET™ framework-based software to deliver ISA95 Level 3 standards-based functionality.

“Unveiling of the Syncade Suite is another exciting step in realizing the fully intelligent digital plant,” commented Tom Snead, president of the process systems and solutions division of Emerson Process Management. “The new operations management suite integrates the industry’s broadest, most reliable process intelligence from PlantWeb architecture and makes it easy and efficient to use for optimum operational decisions.”

Syncade Smart Operations Management suite is a family of software modules that provide easy, flexible, integrated solutions in four performance enhancing, functional areas: resource management, operations optimization, integrated information, and quality and compliance.

Resource Management: Effectively managing resources allows you to do more with less. Optimizing material conversion and eliminating the use of unsuitable material can reduce waste and rework. Scheduling, verifying and tracking proper equipment use can increase throughput. Improving operator productivity by guiding manual processes and enabling access to support documents can increase performance. Ensuring personnel have the proper skills, training and qualifications needed to effectively perform their jobs can minimize variability, improve company moral and support the fact that people are your greatest asset.

Operations Optimization: Improving plant workflow processes can significantly impact plant performance. Order management, material weighing/addition/traceability status, equipment state/cleaning/calibration tracking, product sampling and adjustment, electronic procedural control and data collection, are examples of workflow processes critical to optimizing operations. Syncade suite allows these diverse plant functions to be optimally coordinated, with easy access to information that impacts plant performance.

Quality and Compliance: Proper documentation ensures compliance with regulatory requirements and enables better user decisions by providing timely, “point of use,” accurate information. Too often, documentation can be a hindrance due to overwhelming volume, difficult accessibility, and missing information. Syncade suite eliminates these problems by providing effective data and document management throughout the lifecycle of a document, including online storage, change control, automatic routing, version management, and archived records management. Syncade software helps you turn your documents into management assets; rather than organizational burdens.

Integrated Information: Access to the right data at the right time enables better decisions. Integrating smart, real-time plant-floor data with your business practices helps your organization work smarter. By coordinating “handshaking” functions between existing plant systems and electronically guiding manual processes, plant operations can be streamlined. Syncade suite takes advantage of industry standards to enable easy and maintainable “plug and play” integration with other systems that impact your operations performance.

Modularity and scalability mean flexibility and focus: process manufacturing personnel and Emerson experts can analyze operations and then prioritize improvement projects, choose the appropriate standards-based modules, and begin implementation. It is not necessary to design and implement an entire infrastructure. A further advantage of scalability is that modules can support a small number of users at startup with additional users being added as needed. After initial process improvements are realized, additional modules can be implemented as time and budget permits.

Emerson’s launch of Syncade suite is one of many results of its proven corporate commitment to continuing innovation. Combined with Emerson’s strength and stability over a 100 year history of supplying process automation solutions, the Syncade suite makes the company an ideal choice for collaboration on ISA95 Level 3 operations management improvements. And Emerson’s PlantWeb architecture is proven in thousands of global manufacturing sites to provide the highest quality platform of process and plant data for operations decision making and management.

Emerson’s industry center and service resources support the broad, growing PlantWeb adoption and extension to ISA95 Level 3 solutions. The combination of innovative, proven PlantWeb digital architecture and expert services has made Emerson an industry leading solutions supplier. End users often combine engineering and project management services with Emerson’s broad technology platforms to deliver a Main Automation Contractor solution for new construction and modernization. Emerson also consults with end users on automation and asset optimization improvements, providing vital aftermarket services to sustain peak performance. Emerson uses its industry knowledge and PlantWeb experience to help users integrate real-time, plant-floor data with improved business practices resulting in better performance.

ABB wins $159-million full service contract

Five-year agreement in Germany aims to increase efficiency, productivity
Zurich, Switzerland, Jan. 22, 2009 – ABB, the leading power and automation technology group, has renewed an agreement worth about $159 million over the next five years to manage maintenance and increase productivity at several plants in the Werk Bobingen industrial park near Munich, Germany.

ABB will provide performance-based maintenance services at the site for polyester product manufacturers Johns Manville, Performance Fibers, Trevira and Teijin Monofilament. ABB will evaluate plant processes to improve efficiency of maintenance and repair operations, as well as maintain power generation and distribution facilities, and infrastructure such as fire protection and site security for the entire 80-hectacre complex.

This agreement was first signed in 1999, and renewed in 2003. The current contract begins in January 2009, and is one of ABB’s largest full service agreements.

“ABB’s combination of innovative service solutions, local knowledge and unsurpassed application experience have helped us build an effective relationship with customers at this site,” said Veli-Matti Reinikkala, head of ABB’s Process Automation division. “Our reputation for delivering results has been crucial to maintaining this successful partnership over the years.”

ABB acquires full ownership of Finnish joint venture

Investment will strengthen position in the Nordic low voltage business
Zurich, Switzerland, January 8, 2009 – ABB, the leading power and automation technology group, has agreed to acquire all interests in the Finnish joint venture, Ensto Busch-Jaeger Oy, from Ensto Oy, subject to the customary regulatory approvals.

ABB owns a 21-percent stake in the joint venture, and has agreed to take over the 79-percent stake of the business owned by the privately held Ensto Group for an undisclosed amount. The transaction is expected to close in the first quarter 2009.

Ensto Busch-Jaeger was formed 28 years ago by ABB subsidiary Busch-Jaeger Elektro of Germany and the Ensto Group of Finland to produce high-quality wiring accessories and installation material such as light switches and sockets for the Nordic residential and commercial building markets.

The business employs about 120 employees and is based in Porvoo, Finland, with business activities in Sweden and Norway. It will be part of ABB’s Automation Products division. In 2007, Ensto Busch-Jaeger had revenues of about $55 million.

“This investment is fully in line with our strategy to broaden our market scope with value creating acquisitions,” said Tom Sjoekvist, head of the Automation Products division. “Building on our existing long-term relationship, ABB is ideally positioned to further grow Ensto Busch-Jaeger’s portfolio of high-quality products in the Nordic markets, and to better cover the markets and serve customer demand.” Sjoekvist added.

C-Tech awarded development grant

C-Tech Innovation has been awarded a development grant of GBP278,000 from The Carbon Trust to demonstrate the potential of energy savings for a range of chemical reactions.

C-Tech Innovation’s expertise in microwave engineering will help build and test a continuous flow, laboratory microwave reactor system that is capable of producing kilograms of material per day.

Microwave-enhanced chemistry has been used for a number of years by laboratory chemists, particularly in pharmaceutical discovery, to speed up chemical reactions.

However, to date, the technology has only been capable of producing milligrams or, at most, a few grams of material.

A key feature of C-Tech’s reactor design is that it is scalable, enabling it to form the basis of future industrial units that will be capable of producing much larger quantities of material, up to hundreds of kilos or even tonnes of material per day.

The UK chemical industry’s annual energy usage is currently around 68,000GWh, with a significant proportion of this being used in processes associated with the production of chemicals.

Advantages achieved through the use of microwaves can lead to substantial energy savings and, for example, the reduction in reaction time achieved at laboratory scale by using microwave technology has been significant.

Moving to industrial scale production can result in energy savings (up to 90 per cent).

Couple this with the added benefit that higher yields can be produced at the same time, the quantity of reactant that needs to be processed can be cut by up to 50 per cent, resulting in further energy savings.

C-Tech Innovation will be presenting on microwave chemistry at Achema 2009, 11-15 May 2009, in Frankfurt.

DCS market in Latin America continues to grow

Developing economies such as Latin America continue to offer some good growth prospects for suppliers in the process industries that are well positioned to take advantage of them.

The Distributed Control Systems (DCS) marketplace in Latin America is one such example.

‘The DCS market in Latin America will grow at the average annual rate of close to 10 per cent through 2012, reaching a total size of almost USD1.5bn,’ said ARC research director Larry O’Brien, the principal author of the ARC report ‘Distributed Control Systems Outlook for Latin America’.

Most of this growth is driven by infrastructural industries such as power generation and traditional heavy process industries such as oil and gas, refining and petrochemical.

The mining industry is also a key contributor.

Automation suppliers with the largest direct presence in Latin America are the most successful.

While relationships with representatives can help penetrate markets where suppliers don’t have a presence and systems integrators can help provide project services, there is no substitute for having local people that can fill critical roles, not only in sales and project support but also in ongoing maintenance and operational services.

It can be a challenge for suppliers to build their own local presence in Latin America; the local talent can be hard to find.

Many suppliers have begun acquiring companies, including rep firms, in Latin America to boost their presence there.

ABB, for example, recently acquired CMS Tecnologia in Chile.

Some suppliers have developed large training centers, so aspiring engineers and technicians will have ready access to knowledge of their systems and solutions.

In order for one major automation supplier to get a contract with a mining company in a remote location, for example, they had to help build a local training and education centre.

Both end users and engineering and procurement firms (EPCs) are increasingly looking to automation suppliers to provide them with automation project execution capabilities, and Latin America is no exception.

Many factors are contributing to growth in project and engineering services for automation suppliers.

As a result, suppliers are beginning to fill the role of a main automation contractor (MAC), overseeing all aspects of an automation project and providing a single point of responsibility for the project from design to startup.

The ability of the customer to influence project costs diminishes as the project nears its latter phases, but these latter phases are also where the bulk of project costs start to accrue.

The ability to have a single point of responsibility in an automation supplier that acts as a primary automation contractor is essential to controlling project costs, especially when it comes to preparing expert proposals that portray a realistic and honest view of project costs so they can be managed effectively.

The increasing pressure faced by end users and EPCs also means that projects need to be finished as quickly as possible.

Quicker time to startup means quicker time to profitability.

In industries, such as fine chemicals and life sciences, faster time to startup is a matter of competitive survival.

Automation suppliers with the right capabilities can provide a single point of responsibility for project management, coordinating activities among multiple automation suppliers and subcontractors and freeing up the end user and EPC to focus on what they do best.