It's been a difficult year for Honeywell International (HON 1.12%). And that's understandable -- there's just no way for industrial companies to avoid being impacted by the weakness in the economy. However, if there's one industrial player that's taking all possible steps to wring every bit of growth that it can out of its end markets, it's Honeywell, and that is positioning the Charlotte, North Carolina-based company well for the future.

How Honeywell makes money

With industrial conglomerates, it always makes sense to break out earnings by segment. For Honeywell, aerospace remains the biggest revenue generator despite the carnage 2020 has wrought on the airline industry.

Segment

Q3 2020 Profit

Q3 2019 Profit

Change

Aerospace

$617 million

$908 million

(32%)

Honeywell Building Technologies (HBT)

$282 million

$297 million

(5.1%)

Performance Materials and Technologies (PMT)

$442 million

$582 million

(24.1%)

Safety and Productivity Solutions (SPS)

$219 million

$195 million

12.3%

Total

$1.553 billion

$1.928 billion

(19.5%)

Data source: Honeywell International.

Aside from the SPS segment, the numbers look pretty dismal, but there are other details to consider. First, as the chart below shows, all four of the segments improved their performance compared to the second quarter.

Honeywell segment organic growth.

Data source: Honeywell International

Second, within each of the segments, there are businesses primed to recover well given a rebound in the broader economy.

Aerospace

Everyone is naturally concerned by the slump in commercial aviation in 2020 and its weak outlook for 2021. On the other hand, Honeywell's aerospace segment derived 56% of its sales from the defense and space industries in the third quarter. In addition, the business and general aviation (BGA) market is typically responsible for around a third of Honeywell's commercial aviation revenue. Both facts should give investors cause for optimism.

The defense and space segment is likely to remain stable, though CFO Greg Lewis said during the recent earnings call that the company foresees it growing at a "reduced pace versus our 2020 growth rates" in 2021. Meanwhile, the BGA market is far less impacted by the COVD-19 pandemic. Lewis noted that BGA aftermarket sales "went from down 50% to only down 28%, so we saw some nice sequential improvement on the BGA space." Moreover, Honeywell's management believes that business jet usage will be back at 2019 levels by the middle of 2021.

Honeywell Aerospace organic growth.

Data source: Honeywell International.

Honeywell Building Technologies

Management is definitely not standing still with the HBT segment. CEO Darius Adamczyk believes there's a growth opportunity for the company as building owners invest in creating healthier indoor environments, and Lewis talked of a $600 million pipeline of orders for healthy building solutions.

In addition, the initial focus of the recently announced agreement with Microsoft (MSFT 0.11%) will be in the HBT segment. In a nutshell, Honeywell has created a building management software on Microsoft's cloud platform that will allow building owners to gather real-time data in order to better run and maintain their facilities.

Connected buildings.

Image source: Getty Images.

Performance materials and technologies

The PMT segment has exposure to the price of oil and the automotive industry through its process automation, refining catalyst and absorbents (UOP), and advanced materials businesses -- and those dragged on the company's results in 2020. Unfortunately, those businesses are unlikely to improve much in the near future: As Adamczyk noted, many of PMT's oil-and-gas-focused customers have cut their spending budgets for this year.

Clearly, it's going to take a combination of higher oil prices, some improvement in the global economy, and some loosening of spending in the heavy industries sector for the PMT segment to improve its results in 2021.

On a more positive note, automotive production has come back, and Adamczyk noted that PMT had seen "slide outs and push outs, but we have not seen cancellations" of projects.

Safety and productivity solutions

Honeywell's strongest segment right now, SPS contains some businesses that have seen demand surge due to the COVID-19 pandemic. Honeywell's personal protective equipment sales were up by double-digit percentages in the third quarter.

Similarly, Honeywell's warehouse automation business, Intelligrated, continues to see strong growth as retailers make heavy investments in e-commerce warehousing -- another market that's been boosted by the pandemic. Meanwhile, the company's investment in new scanning and mobility products appears to be paying off, with "strong demand" coming for them according to Lewis.

What it means to investors

Overall, there's still a lot of uncertainty around Honeywell's prospects for 2021, but the company looks better positioned than most in its industry. The aerospace segment should find support from the business aviation, defense, and space markets. Meanwhile, HBT is being actively positioned for growth, and SPS is already in growth mode. PMT clearly faces challenges, but a recovery in the global economy is likely to help stabilize it, too.

As such, if you invest in Honeywell, then you'll be buying into a company that's pulling out all the stops in its efforts to outperform its end markets in 2021.