Carrier Global presented its financial outcomes for the fourth quarter of 2025 and offered a forward-looking perspective for 2026, navigating a year marked by unexpected softness in the residential and light commercial sectors. Despite these challenges, the company demonstrated resilience, achieving substantial growth in its commercial HVAC and aftermarket services, and significantly expanding its data center operations. Strategic cost reductions, targeted investments in technology, and a focus on high-return opportunities are set to bolster Carrier's performance in anticipation of market recovery.
The company's leadership emphasized a proactive approach to market dynamics, including aggressive cost management and strategic capital allocation, distributing $3.7 billion to shareholders through buybacks and dividends. Looking ahead, Carrier is poised for continued growth in key areas like data centers and advanced energy systems, projecting double-digit revenue increases in commercial HVAC, particularly within the data center segment. This comprehensive strategy underlines Carrier's commitment to innovation, operational excellence, and maximizing shareholder value amidst evolving market conditions.
Strategic Growth and Market Adaptation
Carrier Global concluded 2025 by confronting an unanticipated downturn in its residential and light commercial markets, a situation that prompted the company to intensify its focus on strategic initiatives. While organic sales saw a slight decline due to these softer segments, Carrier successfully mitigated the impact through robust performance in long-cycle and aftermarket businesses. The company's data center portfolio emerged as a significant growth driver, reaching approximately $1 billion in revenue and showcasing the success of its investment in this rapidly expanding sector. Furthermore, Carrier continued to achieve double-digit growth in commercial HVAC for the fifth consecutive year, alongside similar growth in its aftermarket services, demonstrating the effectiveness of its diversified business model. These achievements underscore Carrier's capability to adapt to challenging market environments by leveraging its strengths in high-growth areas and optimizing operational efficiencies.
The strategic actions taken by Carrier in 2025, including aggressive cost and pricing adjustments and decisive overhead cost reductions, are projected to yield over $100 million in savings for 2026. These measures, combined with continued investments in technology differentiation, sales, and technical personnel, are designed to enhance the company's competitive edge and prepare it for stronger growth when short-cycle markets rebound. Carrier's expanded product offerings, particularly in data center chiller applications with its new Maglev bearing air-cooled chillers, and the introduction of advanced CDUs for liquid cooling, signify its commitment to innovation. The growth in connected chillers under service agreements and the success of its Home Energy Management System (HEMS) offerings in both the US and Europe further highlight Carrier's pursuit of comprehensive and integrated energy solutions, positioning it as a leader in sustainable and efficient climate control technologies.
Financial Performance and Future Outlook
Carrier Global's fourth-quarter financial results revealed a reported sales figure of $4.8 billion and an adjusted operating profit of $455 million, leading to an adjusted EPS of $0.34. These figures, while reflecting a year-over-year decline primarily due to reduced volumes in high-margin residential and light commercial sectors, also benefited from a 3% positive currency translation. The quarter also saw total company orders increase by over 15%, fueled by strong demand in CSA Commercial, indicating underlying market strength in certain segments. Despite the challenges, solid productivity partially offset the decline in adjusted operating profit, and a robust free cash flow of approximately $900 million in Q4, with a full-year total of about $2.1 billion, met expectations. This financial resilience, particularly the management of inventory and accounts receivable, showcases Carrier's strong operational and financial discipline.
Looking ahead to 2026, Carrier anticipates flat to low-to-mid single-digit organic growth, with reported sales expected around $22 billion. This forecast factors in a significant revenue headwind from the divestiture of Riello but projects continued double-digit growth in commercial and aftermarket segments globally. The company expects a challenging first half for residential segments, followed by recovery in the latter half, driven by the absence of destocking. Adjusted operating profit is forecasted at approximately $3.4 billion, supported by modest organic growth and productivity gains, despite some unfavorable business mix and ongoing investments. Carrier aims for an adjusted EPS of approximately $2.8, representing high single-digit growth compared to 2025, buoyed by increased operating profit, a lower tax rate, and share buybacks. This forward-looking guidance emphasizes operational excellence, strategic market positioning, and a disciplined approach to managing costs and investments to drive sustained growth and profitability.