Honeywell International (HON) announced Thursday plans to split into three publicly-listed entities as part of the company's goal to optimize its portfolio, while the industrial conglomerate issued a downbeat full-year outlook despite beating market expectations for the fourth quarter.

The company will separate its aerospace technologies division from the automation business and move ahead with its previously disclosed plan to spin off its advanced materials unit. The separation, which will be carried out in a tax-free manner to Honeywell's shareholders, is expected to be completed in the second half of 2026, subject to regulatory approval and other conditions.

The three entities, Honeywell Automation, Honeywell Aerospace and Advanced Materials, will have distinct strategies and growth drivers, according to the group. The move follows a business portfolio review launched by Chief Executive Vimal Kapur about a year ago.

"Our simplification of Honeywell has rapidly advanced over the past year, and we will continue to shape our portfolio to create further shareholder value," Kapur said in a statement. "As a standalone company with a simplified operating structure and enhanced focus, Honeywell Automation will be better able to capitalize on the global megatrends underpinning its business."

In November, activist investor Elliott Investment Management disclosed a more than $5 billion investment in Honeywell and urged the company to split into two standalone entities to separate its aerospace and automation businesses. "The enhanced focus, alignment, and strategic agility enabled by this separation will allow Honeywell to realize the opportunity for operational improvement and valuation upside," Elliott Partner Marc Steinberg and Managing Partner Jesse Cohn said in the Thursday statement.

In December, Honeywell said it was evaluating a potential separation of its aerospace business, following its announcement in October that it would spin off its advanced materials business. The spin-off of the advanced materials unit is expected by the end of this year or early 2026.

Since December 2023, the company has completed about $9 billion of accretive acquisitions to support its increased focus on automation and simplify its portfolio, according to the statement.

In a separate statement, Honeywell said it expects adjusted earnings to be in a range of $10.10 to $10.50 a share for 2025 and sales to come in between $39.6 billion and $40.6 billion. The current consensus on FactSet is for non-GAAP EPS of $10.92 and sales of $41.26 billion. In the previous year, adjusted EPS increased 4% annually to $9.89, while sales improved 5% to nearly $38.5 billion.

Shares of the company were down 3.3% in premarket activity.

For the December quarter, the group's adjusted EPS declined to $2.47 from $2.69 the year before, but came in ahead of the Street's view for $2.32. Sales increased to $10.09 billion from $9.44 billion in the prior-year period, above the average analyst estimate of $9.84 billion.

Aerospace technologies sales were up 9% year over year to $3.99 billion, driven by commercial aftermarket and defense and space. Industrial automation revenue fell 1% to $2.57 billion while building automation jumped 20% to nearly $1.8 billion. The energy and sustainability solutions segment saw sales incline 4% to $1.73 billion.