2020 was not supposed to be a good year for Honeywell. Most of its revenue comes from its aerospace business. Despite this, the company’s share price is at record levels.
It rejoined the Dow Jones Industrial Average in September after an absence of 12 years. A new company is emerging, and the architect is CEO Darius Adamczyk. (HON: NYSE).
Darius is a bold leader who knows how to achieve growth. He focuses on potential and divests from distractions.
“My intent is to create the best software-industrial company.”
Since becoming CEO in April 2017, Darius has focused on innovation in new segments. He wants to transform Honeywell from an industrial company into a software company.
Such transformations aren’t easy. GE failed at this a decade ago. Honeywell also lost the computing battle to IBM in the 1970s and 1980s. But this time, Honeywell has Darius.
Darius personally transformed himself from a computer engineer into a CEO. He started as an engineer at GE. After five years, he decided to become a business leader and went to Harvard for his MBA.
He joined Honeywell in 2008 when Honeywell acquired the company he was CEO of.
At Honeywell, he has demonstrated hard work and passion. He doubled sales in the Scanning and Mobility unit and turned the struggling Process Solutions unit around.
In 2018, after becoming CEO, Darius Adamczyk created a new software business unit. The goal was to extend the company’s dominance in industrial control systems into data processing and software in the cloud. Today, the unit has over $4bn in revenue or 11 percent of Honeywell’s total sales.
Another significant milestone was the release of the System Model H1 quantum computer in October. It is now available for subscribers through Microsoft, Cambridge Quantum Computing, and others.
Quantum computing could be a more significant advance in computing than the silicon chip. Companies like Amazon, IBM, and Google are all spending big on quantum computer development.
Honeywell’s H1 is a big win and the sign of a company transforming itself.
“We are going to try to evolve and lead the way in new technologies.”
Darius is also investing in new technologies like robotics, hydrogen power, and drones.
So far, Darius has mostly done this organically. There has been no flashy acquisition. But Darius is ready to spend when the right target comes along at the right price. Honeywell has a big war chest of cash.
Darius is also not afraid to divest businesses that no longer fit with his vision. In 2018, he spun off Honeywell’s turbocharger business and consumer products unit. Together, these units represented 20 percent of revenue. The consumer products business was also Honeywell’s legacy business from its beginnings.
Darius also did this despite pressure from activist investors to spin off Honeywell’s aerospace business instead.
We can also see Darius’ transformational leadership in miniature with Honeywell’s response to the pandemic.
Honeywell was able to quickly start producing N95 masks and other PPE after the virus hit the US. It is also working on a new form of packaging for vaccines and new UV safety equipment for airlines.
Since Darius took over as CEO, Honeywell’s share price has increased by around 69 percent and is at record levels.
The MACD line has remained above the indicator line since late May.
The stock jumped up with the news of the successful phase 3 results for the Pfizer and BioNTech covid vaccine on November 9 (see chart below).
Revenue increased in the first year but has taken a hit this year (see chart below).