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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Vima Kupor, thank you so much for joining us on

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Speaker 2: Bloomberg TV. Now talk to me about Honeywell because a

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Speaker 2: lot of the companies that we speak to want to

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Speaker 2: try and spin off, become leaner so that you unlock

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Speaker 2: value for investments. So you believe there's space for a conglomerate,

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Speaker 2: it's fairly valued.

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Speaker 1: Look, we as Honeywells are seen historically as a conglomerate,

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Speaker 1: but we've done a lot of work to change two things. First,

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Speaker 1: it is a very sharp and focused portfolio essentially focuses

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Speaker 1: on three things future of aviation, automation, and energy transition.

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Speaker 1: And second thing we're focused is how we build an

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Speaker 1: operating system that we run it as a company and

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Speaker 1: not as a conglomerate, so we're not a holder of

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Speaker 1: assets and people are doing their stuff. We run Honeywell

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Speaker 1: tightly as one operation across these three mega trends.

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Speaker 2: And so basically the mega trends are automation, aviation, and

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Speaker 2: a transition. So what does that mean for where you

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Speaker 2: want to grow? I know you've also had a big

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Speaker 2: acquisition back in December.

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Speaker 1: It basically means each of these mega trends are strengthened themselves,

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Speaker 1: so these are here forever. The aviation we all love

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Speaker 1: to travel, and the traveler is going to get more electrified.

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Speaker 1: We probably all going to have urban air mobility in

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Speaker 1: our lifetime sometimes, so there's a lot of growth there.

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Speaker 1: Automation is the integral part of our life, specifically industry automation,

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Speaker 1: automation and buildings to drive sustainability, and they're the biggest

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Speaker 1: growth vector for US is AI and we can talk

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Speaker 1: about that and energy transition. Hopefully I don't have to

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Speaker 1: explain the planet needs more new molecules. We're essentially focus

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Speaker 1: on green molecules, less on green electrons. And each of

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Speaker 1: these growth vectors are here for several years, which makes

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Speaker 1: Honeywell a compelling proposition for our customers and for our shareholders.

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Speaker 2: So if you look at aviation again, a lot of

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Speaker 2: I guess shareholders say, look, you can unlock value. But

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Speaker 2: at the same time you're seeing a trend for example,

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Speaker 2: possibly looking to reacquire spirit some of the supply chains

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Speaker 2: coming back in a house. Yeah, what does that mean

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Speaker 2: for how much growth you're expecting in that industry?

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Speaker 1: Yeah, it's for us. Our business model is very different.

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Speaker 1: You know, we don't have one concentrated product lines in

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Speaker 1: our business and aerospace. We are nose to tail company

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Speaker 1: and we have multiple systems from cockpit controls to engines,

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Speaker 1: apu's environmental control, satellite comms in a plane, and we

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Speaker 1: typically go to an OEM like Boeing air Bus Bombardier

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Speaker 1: Emperor and position our entire product line because we specialize

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Speaker 1: in systems in a plane, so we get a lot

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Speaker 1: of content. And in every plane you fly, we have

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Speaker 1: a significant Honeywell content. So you're a question. Our equipment

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Speaker 1: is so critical and because it's a system approach, we

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Speaker 1: are not really one product which will backward integrable by anybody.

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Speaker 2: But how does aviation actually change from here?

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Speaker 1: How much electrification? Electrification is the name of the game

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Speaker 1: in future. I think in our lifespan, how much of

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Speaker 1: will we fly in a plane with hydrogen cells, hydroden

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Speaker 1: fuel cells. I can't This is what.

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Speaker 2: Ten years away, fifteen years away.

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Speaker 1: I think technology is being developed. What's available right here

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Speaker 1: and now is use of sustainable aviation fuel. That's a

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Speaker 1: technology which we provide to our energy transition part of

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Speaker 1: our business, and our aerospace business tests that in our

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Speaker 1: engines and our APUs, and that's something which is available today.

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Speaker 1: You can blend all the way up to fifty percent

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Speaker 1: of sustainable aviation fuel in the jet fuel, and that

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Speaker 1: to me is available today. Where it will go forward

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Speaker 1: is more electrification of different different parts of the aeroplane.

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Speaker 1: Think about cooling in the plane, think about propulsion in

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Speaker 1: the plane. And that really positions the urban air ability

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Speaker 1: as the first platform which has been totally electrified, and

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Speaker 1: that's what we're really working on in the future of aviation.

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Speaker 2: How would you describe US manufacturing right now? Again, there

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Speaker 2: have been problems with supply chains, which also means that

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Speaker 2: there's been a repatration of supply chains. I don't know

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Speaker 2: whether that's the end of multilateralism, but certainly it's given

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Speaker 2: a massive boost to a lot of demand coming from

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Speaker 2: the US.

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Speaker 1: Yeah, so US supply chain. Clearly there's more focus to

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Speaker 1: have more indigenousupply in the US. For the last several years,

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Speaker 1: specifically in aerospace, is a lot of rebuild up capacity.

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Speaker 1: A lot of capacity was shed off in terms of

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Speaker 1: during the COVID and a lot of people went off

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Speaker 1: work and rebuilding the capacity with increased demand is immediate

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Speaker 1: challenge on opportunity for in aerospace, which we are working on,

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Speaker 1: but we also see in US expansion of capacity in

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Speaker 1: semiconductor fabs, in EV vehicle batteries and others industries. Some

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Speaker 1: nature it will take a while for that capacity to

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Speaker 1: set up. It's not going to happen overnight, but clearly

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Speaker 1: we see the trend and it helps us in our

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Speaker 1: automation business because we automate a lot of these facilities

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Speaker 1: in battery manufacturing and giga factories and that's part of

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Speaker 1: our growth vector, and.

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Speaker 2: So automation or AI. AI could also help for example,

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Speaker 2: in supply chain, I guess understanding where you needed so

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Speaker 2: that you pre.

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Speaker 1: We have been using that for probably three to four

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Speaker 1: years those techniques. But what excites me about AI is

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Speaker 1: in context of industrial word this is one of the

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Speaker 1: best tool to solve the skill issue because skill shop

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Speaker 1: is a huge problem to all our industrial customers, whether

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Speaker 1: it's people to how to operate the equipment, how to

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Speaker 1: maintain it, and AI makes an average person more productive.

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Speaker 1: The example the thinking point is I came to UK

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Speaker 1: as to live here in twenty ten. I first couple

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Speaker 1: of months I used to use paper maps and always

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Speaker 1: used to lose my way. Then came the Google Maps,

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Speaker 1: and I never lost my way. So it's say it

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Speaker 1: was early version of AI where I was being assisted

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Speaker 1: by somebody versus I was trying to be intelligent by myself.

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Speaker 1: And I think in that same context, when you translate

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Speaker 1: in an industrial word, an operator or a maintenance technician

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Speaker 1: when is sted by a lot of our AI tools,

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Speaker 1: makes them highly productive. So for our customers, it's a

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Speaker 1: great opportunity to dry productivity and revenue growth. Less about

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Speaker 1: you know, job displacement and other convers I was going to.

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Speaker 2: Ask you about job displacement because it must also actually

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Speaker 2: mean that you lose jobs, and so part of that

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Speaker 2: is reach.

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Speaker 1: I yeah, I look at it. You know, there's always

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Speaker 1: a productivity tool which comes in every few years, so

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Speaker 1: this is a new productivity tool. Then skills migrate to

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Speaker 1: a higher level. That's how I think about it. When

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Speaker 1: four or five years back, robotics, process automation was a

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Speaker 1: big deal in twenty eighteen twenty nineteen, and that wave

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Speaker 1: came in and it created certain process automation. Now it's AI.

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Speaker 1: So I think the way I think about it is

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Speaker 1: in context of an industrial company, is that how do

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Speaker 1: we use it to dry productivity and then the next

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Speaker 1: wave comes and we have to rescale ourselves to move

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Speaker 1: on to the next level.

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Speaker 2: What's the most frustrating thing about what you're trying to achieve.

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Speaker 2: I don't know whether there's a misunderstanding. I don't know

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Speaker 2: how many times a day you get asked what you're

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Speaker 2: buying next? Because you're also seeing as a real m

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Speaker 2: and a play.

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Speaker 1: Yeah, so M and a play for Honeywell is all

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Speaker 1: about how do we focus our portfolio into three those

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Speaker 1: mega trends I want to have make Honeywell focused on

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Speaker 1: future of aviation, automation and energy transition. An acquisition we

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Speaker 1: did in Carrier the security business, which we expect to

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Speaker 1: complete it in course of twenty four is a great

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Speaker 1: example of type of acquisitions we want to do. It

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Speaker 1: makes us stronger player in automation as a segment, and

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Speaker 1: you expect us to be more active in both some

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Speaker 1: substraction and some addition in our portfolio.

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Speaker 2: So how much more can we expect? A lot of

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Speaker 2: them and A So you started as a chief executive

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Speaker 2: in June December. You were buying a company worth five billion,

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Speaker 2: so you didn't waste any time.

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Speaker 1: Yeah, I mean this is something which you know, we

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Speaker 1: compete in that segment, so we reasonably well knew about

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Speaker 1: that asset. So I would say to answer your question,

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Speaker 1: we have committed that we spend eight billion a year

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Speaker 1: of capital in terms of capital redeployment, and some part

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Speaker 1: of it is fixed in terms of dividend and shared

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Speaker 1: by back. But I'd like to have more bias of

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Speaker 1: that capital spent on acquisition to rebuild the Honeywell portfolio

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Speaker 1: which is more growth oriented, all aligning to the right

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Speaker 1: new mega trends.

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Speaker 2: And this is mainly in the US because of the

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Speaker 2: US exudationalism.

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Speaker 1: Not really. I mean I think we always have done

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Speaker 1: a lot of acquisition of European based assets also over

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Speaker 1: the last many years. I mean, in fact, we were

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Speaker 1: long history of a lot of acquisitions in Germany and

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Speaker 1: UK other parts of Europe. Yeah, it depends on the

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Speaker 1: asset quality. We're really not biased on where it should

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Speaker 1: be really based in.

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Speaker 2: How much was inflation tough for you in terms of

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Speaker 2: wage negotiations but also just the price of your components it.

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Speaker 1: Was when it started in twenty one, I would say

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Speaker 1: it certainly was a headwind, but we learn through practices

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Speaker 1: really to professionalize uprising processes, really understand how to capture pricing,

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Speaker 1: how to dry value. And it's one of the best

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Speaker 1: processes today where we do the balance from our shareholder perspective,

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Speaker 1: the inflation not being on a headwind, and from our

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Speaker 1: customers give them value for money for the products which

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Speaker 1: we delivered to them.

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Speaker 2: When you look at the years ahead, I know the

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Speaker 2: energy transition has disappointed many because it was quite FIERCEO

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Speaker 2: and then now it's maybe taken a little bit of

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Speaker 2: a backstep. If this is your third pillar, how fast

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Speaker 2: did you see it accelerating?

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Speaker 1: Look, we are in the we do too. Then let

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Speaker 1: me retract back. For energy transition to happen, you can

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Speaker 1: do three things. Energy efficiency, green molecules, and green electrons.

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Speaker 1: We have been in an energy efficiency business for the

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Speaker 1: last forty years, so that's more and more demand is

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Speaker 1: coming that What new has to be done is green

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Speaker 1: electrons and green molecules. I think we all see a

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Speaker 1: lot of green electrons happening all around us, a lot

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Speaker 1: more renewables all around us. The green molecules haven't moved

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Speaker 1: at the same pace. It requires capital return on capitalist

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Speaker 1: sometimes is less, so we need some garment policy, some sports,

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Speaker 1: some text credits, etc. And I think that's moving at

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Speaker 1: a slower pace than I would like it to see.

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Speaker 1: But I'm very optimistic that new technologies like sname, releviation fuel, hydrogen,

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Speaker 1: more use of carbon capture is going to become integral

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Speaker 1: part of energy transition in the times to come.

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Speaker 2: Are you frustrated by your share price?

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Speaker 1: Yes, I am. It will be fair to say that

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Speaker 1: we're not getting fear valuation for what we do, but

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Speaker 1: that's my job to tell our story. And Honeywell is

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Speaker 1: a great portfolio the things we do, and it's growth

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Speaker 1: oriented and we're gonna we're gonna deliver our results and

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Speaker 1: we get a fair valuation through our results