Honeywell reported its financial results for the fourth quarter and full year 2025, showing adjusted sales and earnings that exceeded the upper end of company guidance. The company also provided its outlook for 2026 and updated investors on the planned spin-off of Honeywell Aerospace, which is now expected to be completed in the third quarter of 2026, earlier than previously announced.
The company’s fourth-quarter sales growth was mainly driven by strong demand in the Aerospace and Building Automation segments. Organic orders increased by 23%, with notable double-digit growth in Aerospace Technologies and Energy and Sustainability Solutions (ESS). This contributed to a sequential backlog increase of 4%, reaching over $37 billion.
Operating income for the quarter decreased by 35%, and operating margin fell by 640 basis points to 10.2%. These declines were attributed primarily to one-time impairment charges related to classifying Productivity Solutions and Services (PSS) and Warehouse and Workflow Solutions (WWS) as assets held for sale, as well as a charge within Aerospace Technologies linked to Flexjet-related litigation matters. Adjusted segment profit, excluding these charges, rose by 23% to $2.3 billion, led by growth in Aerospace Technologies and Building Automation.
Earnings per share (EPS) for the fourth quarter were $0.49, down 72% due mainly to one-time charges. Adjusted EPS was $2.59, up 17%. Operating cash flow totaled $1.2 billion, a decrease of 38%, while free cash flow rose by 48% to $2.5 billion.
For all of 2025, reported sales grew by 8%, with adjusted sales up by 9%—surpassing original guidance by two percentage points. Full-year EPS was flat at $7.57; adjusted EPS climbed by 12% year over year to $9.78.
“We concluded 2025 with strong results that exceeded the high end of our guidance for adjusted sales and adjusted EPS. Orders grew 23% stemming from robust demand in the Aerospace Technologies and Energy and Sustainability Solutions segments, including from our LNG acquisition that closed last year. As a result, we exited 2025 with a record backlog of over $37 billion which positions us well for 2026,” said Vimal Kapur, chairman and CEO of Honeywell.
Kapur continued: “During the quarter, we also made considerable progress on our portfolio optimization, with the spin off of Solstice Advanced Materials complete. Building on this momentum, we now expect the separation of our automation and aerospace businesses to be completed in the third quarter of 2026. In preparation, this quarter we established our go-forward segment structure for Honeywell, built on complementary business models that will drive cross-portfolio synergies and accelerate profitable growth over the long term, and announced the leadership team for Honeywell Aerospace. These actions all marked critical steps in our simplification journey. With strong management teams and clear strategies in place for both automation and aerospace, we are confident in our ability to deliver on our 2026 commitments,” concluded Kapur.
Aerospace Technologies saw organic sales grow by 21% year over year during Q4 or by 11% when excluding impacts from an agreement signed with Bombardier last year. Commercial aftermarket sales rose organically by 13%, while defense and space sales increased by 10%. Commercial original equipment also experienced higher output due to improvements in supply chains.
Industrial Automation’s organic sales increased modestly at both yearly (1%) and sequential (4%) rates during Q4; Warehouse & Workflow Solutions led this growth with a steady pipeline conversion while sensing technologies benefited from strength across industrial markets.
Building Automation achieved an organic sales increase of eight percent compared to Q4 last year; building solutions grew nine percent led primarily by services demand while building products posted an eight percent gain driven largely from North America and Middle East markets.
Energy & Sustainability Solutions experienced a seven percent organic decline due largely to softer petrochemical catalyst demand; however orders continued growing within UOP driven particularly by liquefied natural gas projects as well as refining/petrochemicals workstreams.
Looking ahead into next year’s forecast (2026), Honeywell expects total annual sales between $38.8 billion–$39.8 billion—representing three-to-six percent organic growth—and segment margins between approximately twenty-three percent alongside six-to-nine percent higher adjusted earnings per share ($10.35–$10.65). Free cash flow is projected at between $5.3 billion–$5.6 billion representing four-to-ten percent annual growth; these figures do not yet account for any impact from Honeywell’s pending acquisition of Johnson Matthey’s Catalyst Technologies business.
During Q4 the company finalized its spin-off of Solstice Advanced Materials—which began trading independently under ticker ‘SOLS’—and classified PSS/WWS units as held-for-sale following strategic review efforts aimed at focusing resources on core automation capabilities exposed to secular industry trends globally.
In November new leadership appointments were announced including Jim Currier as President/CEO of Honeywell Aerospace and Craig Arnold as Board Chairman upon separation; Josh Jepsen was named CFO along with other executive moves preparing both automation/aerospace units for independent operation post-separation later this year.
On January 21st it was disclosed that ongoing litigation involving Flexjet had been resolved through comprehensive settlement agreements extending commercial partnerships through aircraft engine maintenance contracts running until 2035—with similar claims among related parties like StandardAero/Duncan Aviation being settled concurrently—paving way towards renewed collaboration going forward.
Investors can access today’s earnings webcast via Honeywell Investor Relations where replay will remain available thirty days post-event; further corporate news/updates may be found at Honeywell Newsroom.
