Honeywell 2008 Annual Report Download - page 48

Specialty Materials segment profit increased by 10 percent in 2008 compared with 2007. This increase is due
principally to increased UOP, Fluorine Products and Resins and Chemicals sales as a result of the factors
discussed above and higher income from our joint ventures, partially offset by the impacts of hurricanes Gustav
and Ike and the fourth quarter sales decline noted below. Overall, the effects of increased pricing reflecting the
pass-through of higher raw material costs and other pricing actions (including benefits from formula based pricing
arrangements) and productivity gains more than offset raw material (most significantly sulfur) and other inflation.
In 2009, we expect continued declines in global demand for commodities such as caprolactam and
ammonium sulfate, as well as demand from semiconductor customers, and delays in the timing of new unit
deliveries of UOP products and catalyst reloads.
2007 compared with 2006
Specialty Materials sales increased by 5 percent in 2007 compared to 2006 driven by (i) a 16 percent
increase in UOP sales primarily as a result of higher volume in its projects business principally due to capacity
expansion in the refining and petrochemical industries and (ii) a 4 percent increase in Specialty Products sales
due in large part to increased sales of electronic chemicals and specialty additives and higher sales to customers
in the health care industry. Partially offsetting these increases was a 6 percent decrease in Fluorine Products
sales primarily due to lower refrigerant pricing and lower sales volume of foam blowing agents used in insulating
material as a result of continued weakness in the U.S. housing market.
Specialty Materials segment profit increased by 16 percent in 2007 compared with 2006 principally due to
increased UOP and Specialty Products sales partially offset by the decline in Fluorine Products sales as a result
of the factors discussed above. Additionally, the effects of increased pricing and productivity more than offset raw
material and other cost inflation.
2009 Areas of Focus
Specialty Materials primary areas of focus for 2009 include:
• Achieving productivity savings and pricing actions to offset inflation and reduced capacity utilization;
• Managing business exposure to commodity market conditions;
• Reduce manufacturing costs and drive quality and delivery improvement through improved plant
operational performance;
• Timing of UOP catalyst sales and conversion of confirmed backlog;
• Prioritizing capital expenditures;
• Developing new products that address energy efficiency, renewable energy sources, global warming and
security regulations;
• Increasing product differentiation; and
• Continued contract wins and development of new process technologies and products in the petrochemical
and refining industries.
Transportation Systems
Overview
Transportation Systems provides automotive products that improve the performance, efficiency, and
appearance of cars, trucks, and other vehicles through state-of-the-art technologies, world class brands and
global solutions to customers' needs. Transportation Systems' products include turbochargers and charge-air and
thermal systems; car care products including anti-freeze (Prestone(R)), filters (Fram(R)), spark plugs
(Autolite(R)), and cleaners, waxes and additives (Holts(R)); and brake hard parts and other friction materials
(Bendix(R) and Jurid(R)). Transportation
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