Honeywell Tech Sees Margin Boost from Stranded Cost Elimination

Honeywell Technologies, a pure-play automation company, has been struggling with high operating costs and expenses. In the second quarter of 2026, the company's total cost of sales rose by 7.2% year over year to $6.07 billion. Research and development expenses surged 14.2% year over year to $524 million, while interest and other financial charges increased 10.3% to $363 million.

The separation of the Aerospace business in June 2026 has given Honeywell Technologies an opportunity to focus on its core automation business. The company has also completed the divestiture of its warehouse and workflow solutions and productivity solutions and services businesses, which are expected to support its margin performance and operational efficiency.

Honeywell Technologies is projecting a segment margin of 20.1-20.5% for 2026, indicating an increase of 250-290 basis points on a year-over-year basis. This growth is likely to be driven by the elimination of stranded costs and improved operational efficiency.