Honeywell Wins Shell Contract - Zacks Tale of the Tape

Honeywell International Inc. (HON) announced that it has bagged a global five-year agreement to be a Main Automation Contractor (MAC) for Royal Dutch Shell (RDS-A). The Global Framework Agreement is part of Shell's long-term MAC strategy to maximize production while lowering total operating costs by equipping its worldwide facilities with integrated process automation technologies.

 

As a MAC, Honeywell will design automation and safety systems that will help Shell meet its customers' energy demands in economically and environmentally acceptable ways.

 

For more than thirty years, Honeywell has served as a MAC on scores of Shell projects. Currently, the company is working on three of Shell's largest projects: its new gas to liquids project (GTL) plant in Qatar, the Athabasca Oil Sands Project (AOSP) designed to help Shell dramatically increase production in Western Canada's oil sands, and the expansion of its Port Arthur Refinery in Texas.

 

Designing a new facility with an integrated system allows manufacturers to more accurately plan the integration of new technology in the future. This saves money in the long term by providing systems that can be utilized as part of a bigger technological arrangement.

 

Honeywell International Inc. operates as a diversified technology and manufacturing company worldwide. The company’s Automation and Control Solutions segment offers environmental and combustion controls; sensing controls; security and life safety products and services; scanning and mobility devices; process automation products and solutions; and building solutions and services for homes, buildings and industrial facilities.

 

The company is a global leader in refrigerants, aerosols and foam-insulation blowing agents used to replace ozone-depleting chlorofluorocarbons and hydro chlorofluorocarbons. These same products also improve the energy efficiency of homes, appliances and commercial refrigeration systems.

 

Honeywell’s attractive collection of businesses has the potential to earn consistent above-average returns. The company’s focus on working capital management, free cash flow generation and balance sheet strength remain positive attributes in the current weak environment. Its major competitors include Goodrich Corporation (GR) and Johnson Controls Inc. (JCI).

 

We currently have a Neutral recommendation on HON.