Honeywell 2013 Annual Report Download - page 55

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Factors Contributing to Year-Over-Year Change Sales
Segment
Profit Sales
Segment
Profit
2013 vs. 2012 2012 vs. 2011
Organic growth/ Operational segment profit . . . . . . . . . . . . . 5% 14% (3)% (4)%
Foreign exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0% 1% (5)% (7)%
Total % Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5% 15% (8)% (11)%
2013 compared with 2012
Transportation Systems sales increased by 5 percent in 2013 compared with 2012 primarily due to
an increase in organic sales driven by continued strong growth from new platform launches and higher
global turbo gas penetration.
Transportation Systems segment profit increased by 15 percent in 2013 compared with 2012 due
to a 14 percent increase in operational segment profit and a 1 percent favorable impact from foreign
exchange. The increase in operational segment profit is primarily due to increased productivity (most
significantly the positive impacts from material productivity in Turbo Technologies and ongoing projects
to drive operational improvement in the Friction Materials business), partially offset by unfavorable
pricing. Cost of products and services sold totaled $3.0 billion in 2013, an increase of $127 million
which is primarily a result of increased volume, partially offset by increased productivity.
In January 2014, the Company entered into a definitive agreement to sell its Friction Materials
business unit to Federal Mogul Corporation for approximately $155 million. See Note 2 Acquisitions
and Divestitures for further details.
2012 compared with 2011
Transportation Systems sales decreased by 8 percent in 2012 compared with the 2011 primarily
due to an unfavorable impact from foreign exchange of 5 percent and a decrease in organic sales of 3
percent. Lower sales were primarily driven by decreased light vehicle production in Europe and lower
aftermarket sales partially offset by new platform launches, including higher turbo gas penetration in
North America.
Transportation Systems segment profit decreased by 11 percent in 2012 compared with 2011 due
to a 7 percent unfavorable impact from foreign exchange and a 4 percent decrease in operational
segment profit. The decrease in operational segment profit is primarily due to decreased volume and
unfavorable pricing, substantially offset by productivity (net of the impact of ongoing projects to drive
operational improvement in the Friction Materials business), net of inflation. Cost of products and
services sold totaled $2.9 billion in 2012, a decrease of $235 million which is primarily a result of
foreign exchange, decreased volume and increased productivity.
2014 Areas of Focus
Transportation Systems primary areas of focus in 2014 include:
•Sustaining superior turbocharger technology through successful platform launches;
•Maintaining the high quality of current products while executing new product introductions;
•Increasing global penetration and share of diesel and gasoline turbocharger OEM demand;
•Reducing manufacturing costs through increasing plant productivity and an improving global
manufacturing footprint;
•Aligning cost structure with current economic outlook, and successful execution of repositioning
actions; and
•Aligning development efforts and costs with new turbo platform launch schedules.
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