Honeywell is seeing strong growth in its building automation segment, fueled in part by recurring revenue as more of its customers optimize their operations using the company’s cloud-based platform, Forge, the company said in its fourth quarter earnings report, released yesterday.
“We have been working very hard to change our business model to more recurring revenue and the basis of that is stronger linkage to our IoT platform, Forge,” Vimal Kapur, the company’s CEO and chairman, said on the company’s earnings call.
The company reported 6% top-line sales growth for all its operations for the fourth quarter and 8% for its full-year 2025 performance, the company said. Building automation has been a key part of that increase, growing 8% year over year to $1.97 billion in the fourth quarter. Revenue for the year jumped 13%.
In 2026, Honeywell expects to see above-mid-single digit growth for its building automation business — both products and solutions — fueled in part by data centers, healthcare facilities and building decarbonization, particularly in North America.
“What we have been able to do is really build — I'm going to use the word ontology-based models,” Kapur said. “It means that … when we connect a building, we are able to identify all its assets and really build a reference data model for our customer, which allows us to then build different applications on top of it.”
Kapur called this an “agentic way of working on our customer base.”
The company continues to work through a reorganization it started last year to focus on its three core businesses, all with built environment exposure: building automation, process automation and industrial automation. It completed the spinoff of Solstice Advanced Materials business last year and expects to complete the spinoff of its Aerospace Technologies business by the third quarter of this year.
“We are progressing faster than originally anticipated on our separation milestones,” Kapur said.
To boost its core businesses, the company has added some 600 engineers, part of its effort to grow organic sales using research and development to create new products. In turn, the move could help the company drive revenue growth as it uses its new products as a differentiator, Kapur said.
“Net new growth [from new products] was approximately 4%,” Kapur said. “It means our R&D dollars are creating a differentiated demand into our offerings. And we are able to either keep share or gain share or able to move to new verticals.”
The company expects prices to rise 3-4% this year, about the same as last year, in part because of inflationary pressures from labor shortages, the cost of electronics and commodity prices.
“Our pricing strategy … has become more mature,” Kapur said. We “look at [it] as a long term trend [and] work with our customers … and align with them [on] what's coming ahead.”
The company’s energy and sustainability solutions business was one area where it saw a sales decline in Q4, dropping 7% year over year to $892 million as petrochemical project deferrals led to fewer product shipments.
