US Industrials: Rising Temps in Europe Highlight HVAC Opportunity

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US Industrials: Rising Temps in Europe Highlight HVAC Opportunity

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26 Jun 2026 17:00:09 ET │ 11 pages

US Industrials

Rising Temps in Europe Highlight HVAC Opportunity

CITI’S TAKE

With Europe in the midst of a record breaking heatwave (Europe’s heat

wave is worst ever recorded, researchers say; The Washington Post, 26

June), we remind investors of relatively low air conditioning penetration in

the region, which we think could rise materially over time as periods of

elevated temperatures appear likely to become relatively more common Andrew KaplowitzAC

vs. historical norms. Notably, International Energy Agency (IEA) data +1-212-816-0642

(2018) indicated that only ~20% of European households at the time were andrew.kaplowitz@citi.com

airconditioned vs. ~90% in regions such as the U.S. and Japan. While we

Vladimir Bystricky

surmise that European air conditioning penetration may have risen

vladimir.bystricky@citi.com

somewhat in recent years (given prior heat waves), relatively low

penetration of air conditioning in Europe coupled with seemingly more Piyush Avasthy

frequent and hotter heat waves we think could be support growing AC use piyush.avasthy@citi.com

in the region – a potential tailwind for HVAC companies in our coverage Jose Sulca Flores

including CARR, TT, and JCI. jose.alonso.sulcaflores@citi.com

Additional Thoughts: Amongst out coverage, we think CARR could be a primary

beneficiary of growing AC adoption in Europe given 20%+ of CARR’s overall revenue

is generated by its Climate Solutions Europe (CSE) segment and the company has

indicated that the business has #1 market share in Commercial HVAC and #2 market

share in Residential and Light Commercial HVAC. Notably, CARR during its 1Q26