Carrier's Q2 2025: Key Contradictions in HVAC Sales, Market Performance, and Inventory Management

Residential HVAC sales outlook in the U.S., impact of 25C 179D provisions on sales, productivity and cost improvement initiatives, European market performance and outlook, and inventory management and demand outlook are the key contradictions discussed in Carrier Global Corporation's latest 2025Q2 earnings call.



Strong Organic Growth and Margin Expansion:
- Carrier Global Corporation reported 6% organic growth and expanded their adjusted operating margins by 130 basis points to 19.1%.
- This growth was driven by exceptional 45% growth in commercial HVAC in the Americas, 13% total company aftermarket growth, and strong performance in India, Japan, and the Middle East.

Data Center and Non-data Center Performance:
- Carrier's data center revenue is projected to double to $1 billion this year, with significant growth in non-data center commercial HVAC business expected to rise by 10% year-on-year.
- The success in data centers was due to new products like the large capacity air-cooled chiller, while non-data center growth is supported by differentiated offerings leveraging Viessmann and Toshiba technologies.

Challenges in Europe with Resegment Synergies:
- RLC Europe sales were flat, with Germany down but heat pump unit sales up over 50%. The company continues to see shares improve from 30-70 to 50-50 for heat pumps to boilers.
- Despite European market challenges, Carrier is expected to achieve $200 million in cost synergies by the end of next year, supported by integrated supply chains and multi-brand multichannel strategies.

North America Residential and Light Commercial Outlook:
- Carrier anticipates North America residential sales will be up single digits for the year, with Q2 volume down mid-single digits, attributed to a later cooling season start and consumer watchfulness.
- Light commercial sales are expected to decline about 20%, reflecting lower volume and seasonal factors, though the second half may see some improvement due to inventory levels and recent demand trends.