Carrier Global makes the systems that heat and cool homes, offices, schools, and the refrigerated trucks that keep food and medicine from spoiling. It earns money three ways: selling new equipment, selling the parts and services those systems need over their lifetimes, and licensing its technology through joint ventures around the world. In 2025, new equipment made up 72% of net sales and parts and service made up 28%, which means Carrier gets an upfront payment when a system is installed and then keeps earning from that same customer for years afterward. The company operates under brands including Carrier, Viessmann, Toshiba, Bryant, Carrier Transicold, and Automated Logic, serving customers from individual homeowners to hospitals to shipping companies. The diagram below traces where the money goes.
How Carrier Global Makes Money
flowchart TD
A["New Equipment Sales
15.6 billion dollars"] --> B["Parts and Service Revenue
5.9 billion dollars"]
A --> C["Four Regional Segments
Americas Europe Asia Transport"]
C --> D["Installed Base
Across 52 countries"]
D --> B
B --> E["Operating Profit
2.2 billion dollars"]
E --> F["R&D and Innovation
New products electrification"]
F --> A
E --> G["Capital for Acquisitions
and Organic Growth"]
G --> C
D --> H["Aftermarket Services
Maintenance monitoring upgrades"]
H --> B
Five years of financial data tell a story of a company that deliberately changed its own shape. Revenue ran at $20.6 billion in 2021, dipped to $17.3 billion in 2022 as divestitures reduced the business, then climbed back to $22.5 billion in 2024 after Carrier spent roughly $10.8 billion to acquire Viessmann's climate solutions business in Europe. By 2025 revenue had settled back to $21.7 billion, partly because Carrier continued selling off businesses that did not fit its new focused strategy. That number is not a sign of weakness on its own. It reflects the deliberate exit from fire, security, and commercial refrigeration businesses that management decided were not core to a pure climate and energy company.
Annual Revenue 2021 to 2025 ($B)
Revenue dipped in 2022 as businesses were sold, surged in 2024 after the Viessmann acquisition, then eased in 2025 as further divestitures reduced the portfolio.
Gross margin tells a more complicated story. It was 29% in 2021 and has not returned to that level since. In 2025 it stood at roughly 25.9%. Part of that compression came from the costs of absorbing Viessmann, including inventory step-up charges that the company says are now fully amortized. Part came from lower volumes in certain markets. Management points to productivity initiatives and integration savings as offsets, but the margin trajectory is something worth watching closely as the new combined company finds its footing.
Gross margin has not recovered to its 2021 level after the Viessmann acquisition and ongoing market pressures.
Free cash flow swung dramatically in 2024, dropping to $0.6 billion as the company funded the Viessmann purchase. It recovered to $2.5 billion in 2025, close to the $2.6 billion generated in 2023. That recovery matters because Carrier also took on significantly more debt to pay for Viessmann. Net debt rose from $4.4 billion at the end of 2023 to $8.4 billion at the end of 2024, and climbed further to $10.3 billion by the end of 2025, even as the company used divestiture proceeds to pay down some of what it owed. Managing that debt load while continuing to invest in new products is the central financial tension right now.
$10.3B
Net debt at end of 2025, up from $4.4B just two years earlier
2024
milestone
Viessmann In, Fire and Security Out
Carrier spent approximately $10.8 billion net of cash to acquire Viessmann's climate solutions business, making it a major player in European residential heating and heat pumps. At the same time it sold its fire, security, and commercial refrigeration businesses for combined proceeds exceeding $10 billion. The result is a company that is now almost entirely focused on heating, cooling, and cold chain, with a much larger European footprint than before.
The risks Carrier faces are specific and documented, not just generic warnings. More than half of its sales, exactly 52% in 2025, come from outside the United States. That means currency swings and tariff changes hit the top line directly. Management says it fully offset tariff impacts in 2025 through pricing and supply chain moves, including about $200 million in incremental price increases to customers, but that kind of mitigation has limits.
What Is a Refrigerant Phaseout?
Air conditioners and refrigerators use special gases called refrigerants to move heat around. Some older refrigerants trap heat in the atmosphere and contribute to climate change. International agreements like the Kigali Amendment and U.S. rules like the AIM Act are forcing companies to switch to newer, less harmful refrigerants. Redesigning products to use different gases is expensive and takes years.
Climate regulation is a direct business threat, not a background concern. New rules are phasing out the refrigerants that many of Carrier's current products use. The company may need to spend billions redesigning products to comply, and there is no guarantee customers will accept the new versions at prices that preserve margins. Carrier has committed to investing over $4 billion by 2030 to develop climate and energy solutions that reduce environmental impact, but that spending comes on top of an already elevated debt load.
$4B+
Carrier's stated commitment to invest in climate and energy solutions by 2030
What Is a Joint Venture?
A joint venture is when two companies team up to share ownership of a separate business together. Carrier holds ownership interests in approximately 58 joint ventures around the world. These partnerships help Carrier sell and distribute products in markets where it would be hard to operate alone. If a partner pulls out or runs into financial trouble, Carrier loses that channel.
Supply chain fragility is another named risk. Some components come from only one supplier, meaning a single factory fire, bankruptcy, or quality problem could stop production. Carrier also relies heavily on joint ventures like its partnership with Watsco and arrangements with Midea Group, especially in key regions. If those partners weaken or exit, the distribution network that reaches end customers shrinks with them. Finally, as Carrier adds internet-connected features to its thermostats, chillers, and cold chain monitoring tools, it becomes a more attractive target for hackers. A serious cyberattack could disrupt operations or expose customer data.
Carrier's residential business in the Americas dropped 9% in volume in 2025, partly because distributors were working through excess inventory they had built up earlier. That kind of destocking can mask real underlying demand, making it harder to read whether the slowdown is temporary or structural.
The Bet
Carrier acquired Viessmann assuming that European homeowners will replace gas boilers with heat pumps at a pace fast enough to justify the $10.8 billion price and the debt load that came with it. If European governments slow their subsidy programs, if inflation keeps consumers cautious, or if the regulatory push toward electrification loses momentum, the volume of heat pump installations may fall well short of what the acquisition math requires. The Viessmann business already showed organic sales down 5% in the residential and light commercial segment in 2025 due to lower volumes across the region. Whether that is a temporary pause or the beginning of a longer demand shortfall is the question the entire acquisition thesis hinges on.
Open question
Carrier has reshaped itself into a focused climate and energy company with a much bigger European presence, a recovering cash flow, and a clear plan to grow aftermarket and digital services. But it carries $10.3 billion in net debt, gross margins that have not returned to their 2021 levels, and a core European acquisition that is already producing lower organic volumes than expected. Can the Viessmann business generate enough heat pump demand to justify its cost before the debt load and margin pressure become too heavy to manage?
Compiled · 10-K · FY2025
International Operations & Trade Policy
About 52% of the company's sales come from outside the U.S., making it vulnerable to currency changes, tariffs, and trade restrictions. Unpredictable shifts in U.S. trade policies, especially with China and Mexico where the company operates, have hurt business in the past and could do so again.
Climate Regulation & Product Compliance
New climate rules, like the Kigali Amendment and the AIM Act, are phasing out certain refrigerants that many of the company's HVAC and refrigeration products rely on. The company may need to spend billions redesigning products to comply, and there is no guarantee these investments will succeed or that customers will accept the new products.
Joint Venture Dependencies
The company depends heavily on joint ventures like Carrier Enterprise with Watsco, Inc. and partnerships with the Midea Group, especially in key regions. If these partners fail financially or pull out, or if the company cannot control how these ventures operate, it could seriously harm sales and profits.
Supply Chain & Single-Source Suppliers
Some parts used in the company's products come from only one supplier, and disruptions from tariffs, extreme weather, bankruptcies, or quality problems could stop production and hurt sales. The company has had supply chain problems in the past and could face higher costs or inventory shortages in the future.
Cybersecurity & Connected Products
As the company adds more internet-connected features to its products, hackers could attack these systems or steal customer data, disrupting operations and damaging reputation. Even with security measures in place, sophisticated cyber attacks could go undetected for long periods.
10-K Item 1A · Risk Factors
