2. Forward Looking Statements
This report contains “forward-looking statements” within the meaning of Section
21E of the Securities Exchange Act of 1934. All statements, other than
statements of fact, that address activities, events or developments that we or
our management intend, expect, project, believe or anticipate will or may occur
in the future are forward-looking statements. Forward-looking statements are
based on management’s assumptions and assessments in light of past
experience and trends, current conditions, expected future developments and
other relevant factors. They are not guarantees of future performance, and
actual results, developments and business decisions may differ from those
envisaged by our forward-looking statements. Our forward-looking statements
are also subject to risks and uncertainties, which can affect our performance in
both the near- and long-term. We identify the principal risks and uncertainties
that affect our performance in our Form 10-K and other filings with the
Securities and Exchange Commission.
Goldman Sachs, China Industrial Tour, May 8, 2006
2
3. Honeywell Today
China
APAC
External Sales $0.6B
Total Trade $1.2B
36% 34%
EMEA
Americas
• 118,000 employees in nearly 100 countries
• A Fortune 75 company – $30 billion in sales in 2006
• One of 30 select companies in the DJIA
•Pie Chart calculated using 2005 Sales
Goldman Sachs, China Industrial Tour, May 8, 2006
3
4. HON in China
21 Legal Entities: 11 wholly-owned +4,000 employees
10 joint ventures
2001 - 2005
1990 - 2000
Investment
Timeline 1993 1994 1995 1996 1998 2002 2003 2005
ACS
ACS AERO AERO ACS SM
AERO SM
Tianjin Ltd. Sensors R&O Sites ECS Fire UOP
APU Nylon
TS
SH C&K ACS Parts S&C
Parts
Sinopec JV HTT C&K China
TS
Friction
External Sales Sales by Segment
SM
Aero
2005 $550M TS
2006E $800M
V% 45%
ACS
Rapid Expansion
Goldman Sachs, China Industrial Tour, May 8, 2006
4
5. China’s Contribution To Global Growth
China represents 4% of world economy but accounts
China represents 4% of world economy but accounts
for 11% of global growth
for 11% of global growth
China Share of Worldwide Global Rank
Size
Absolute size 2004 Growth 1999-2004 Growth
GDP 7 2
4.1% 10.8%
Capital
3 1
8.8% 31.0%
Expenditure
3 1
Exports 6.6% 14.1%
Imports 3 1
6.2% 13.8%
Foreign Direct
3 1
8.2% N.M.*
Investment
International
2 2
14.7% 21.0%
Reserves**
* Global FDI over 1999-2004 declined at 7% annually
** International reserves include foreign currency and gold reserves
Source: EIU, World Bank
China A Major Growth Engine For The World
Goldman Sachs, China Industrial Tour, May 8, 2006
5
6. Industrial GDP Contribution
Half of industrial growth is expected to come from emerging markets
1.4
1.24 1.23
1.19
Real industrial GDP 1999–2015(1)
1.2
1
(US$ trillion)
0.8
0.6
0.41 0.40 0.38
0.35
0.4
0.28
0.18
0.2
0
NAFTA China EU South SEA Japan Russia India Eastern
America Europe
(1) At 1996 prices
Emerging Region
Source: EIU; World Bank; CIA; BCG estimates
China is Leading ERs in Terms of Scale and Speed
Goldman Sachs, China Industrial Tour, May 8, 2006
6
7. Long Term Global Growth Outlook: 2005-2030
Incremental GDP Created between 2005-2030 ($B)
12,000
10,000
8,000
6,000
4,000
2,000
0
USA China India SE Asia Russia Latin EU5 East- Japan
America central
Europe
Source: EIU, Global Outlook (May 2005)
Significant Economic Strength
Goldman Sachs, China Industrial Tour, May 8, 2006
7
8. Transportation Systems
Sales ($B) Sales by Region
4.5 ~4.4
4.3 Revenue Mix Geography Mix
3.7
Turbo
Americas Europe
57%
42% 48%
CPG
43%
Asia
2003 2004 2005 2006E
2003 2004 2005 2006E 10%
Turbo Technologies Consumer Products Group
Turbo Technologies Consumer Products Group
43%
57%
Leader In Key Automotive Segments
Goldman Sachs, China Industrial Tour, May 8, 2006
8
9. Turbo Technologies
Sales Sales Turbo Volume
by Region by Segment ~9M
units
Asia
Comm’l
12%
Diesel
Passenger
Europe 33%
Americas Vehicles
58% 30% 67%
2002 2003 2004 2005 2006E
Priorities
• Technology leadership
• Platform wins
• VPD™ and HOS as competitive advantage
• Key Customers: All major OEMs
Global Leader In Turbo Technology
Goldman Sachs, China Industrial Tour, May 8, 2006
9
10. Consumer Products Group
Sales Sales
by Brand by Region
Asia
Autolite
6%
10%
FRAM
23% Europe
32%
Prestone-Holts
Americas
25%
Bendix-Jurid 62%
42%
Priorities
• Win with winners
• Extend brands
• Global growth
• Key Customers: Retailers, WD, OEM
6 Strong Brands Focused On Growth In Asia
Goldman Sachs, China Industrial Tour, May 8, 2006
10
11. TS Asia Footprint
• CPG – Friction • Turbo
-Guangzhou -China
Manufacturing Manufacturing
-Thailand JV – 50% Global Tech Center
IA
G OL JAPAN
Manufacturing -Japan
MO N
-Malaysia JV – 50% Manufacturing
KOREA
Manufacturing Technical center
CHINA
-Ballarat JV – 51% -Korea
Manufacturing Manufacturing
-India, Opened 4Q05
INDIA
THAILAND Manufacturing
PHILIPPINES
-Sydney
MALAYSIA Manufacturing
SINGAPORE
INDONESIA
• CPG – Holt Lloyd
-Japan JV – 90%
AUSTRALIA
Distribution
-SE Asia / China
Branches
-Australia / New Zealand NEW ZEALAND
Distribution
$450M Sales, 1,500 People
Goldman Sachs, China Industrial Tour, May 8, 2006
11
12. TS Aspirations for China
How we think about China: • Market • Employees
• Sales • Assets
• Profits • R&D
• Sourcing • People
Create Global
5
Growth Platform
Based on Key
Themes
4 Expand into New
Markets &
Adjacencies
Revolutionize
3
Global Cost
Structure
China Business
Growth
1
• Growth above market
2
• Sustain profitability
China As A Key Growth Platform
Goldman Sachs, China Industrial Tour, May 8, 2006
12
13. Auto Industry and Drivers - China
Highway Expansion
China’s Coastal Area 50,000
Highway Cargo Transportation
45,000
Turnover (Bn T) / KM
40,000
Hwy Kilometers
2005 832
35,000
• 35.8% of nation‘s GDP in 2005 30,000 2004 762
25,000
2003 710
• 30% of nation’s real investment in 2005 20,000
2002 678
15,000
2001 633
10,000
• 78% of nation’s real usage of foreign
2000 613
5,000
investment -
8
0
2
4
6
8
0
2
4
6
8
8
9
9
9
9
9
0
0
0
0
0
19
19
19
19
19
19
20
20
20
20
20
China ’06 GDP Growth: 8% East Central West
Vehicle Market Demand (‘000)
10000
9000
• Automotive considered pillar industry for the nation
8000
7000
• Emphasis on energy & environmental protection
6000
5000
• Coastal area GDP drives demand for private vehicles
4000
3000
• JVs still only path for foreign OEs to succeed
2000
1000
• Industry keen to build local brands
0
2003 2004 2005 2006 2007 2008 2009 2010 2011
• Overseas expansion: not ‘if” but “when”
HMCV LCV PV
Source: DRI
Third Largest Automotive Market In The World
Goldman Sachs, China Industrial Tour, May 8, 2006
13
14. Automotive Emission Legislation
European CO2 Reduction Objectives
180
165g/km
160
CO2 [g/km]
140g/km
140
120g/km
-15%
120
-27%
100
2012
2002 2008
NOx & Particulates
Japan Europe/China USA
PM PM
PM
[g/Km] [g/Km]
[g/Km]
0.10 0.10
0.10
Euro II (1996/2004)
Japan 2000
Tier I (1994)
Euro III (2001/2007)
0.05
0.05 0.05
Japan 2005 Euro IV (2005/2010) Tier II (2004)
Euro V (2009/Not decided) Tier II (2007)
0.8 Nox (g/km)
0.8 NOx (g/Km)
0.0 0.0
0.5 0.5 0.5
0.8 NOx (g/Km) 0.0
China Set To Follow European Emission Standard
Goldman Sachs, China Industrial Tour, May 8, 2006
14
16. However......
“There is great disorder under heaven.
The situation is excellent!”
- Chairman Mao
“The sky is high and the emperor is far!”
- Anonymous
China: You Are Always Learning!
Goldman Sachs, China Industrial Tour, May 8, 2006
16
17. Honeywell Turbo China
Location: Zhangjiang Hi-Tech Park, Pudong New Area
Ownership: Wholly owned
Initial Investment: US$27 million
Groundbreaking: September, 1994
Land area: 24,500 sq. m.
Building area: 8,000 sq. m.
Output (2004) 470,000 units
Employees: 350
Products: Turbochargers
Customers: Major engine manufacturer
Successful Business Since 1994
Goldman Sachs, China Industrial Tour, May 8, 2006
17
