More frequent and intense heatwaves across Europe could support long-term growth for U.S. HVAC companies as demand for cooling equipment expands in a market where air-conditioning adoption remains comparatively low, Citi analysts said.
The brokerage noted that Europe’s current record temperatures highlight a structural opportunity for manufacturers of heating, ventilation and air-conditioning systems, particularly as consumers and businesses seek greater protection from prolonged periods of extreme heat.
According to International Energy Agency data cited by Citi, only about one in five European households had air conditioning in 2018, compared with roughly nine in ten homes in both the United States and Japan.
“Relatively low penetration of air conditioning in Europe coupled with seemingly more frequent and hotter heat waves” could support growing use of cooling systems in the region, Citi analysts wrote.
Among the companies expected to benefit, Citi highlighted Carrier Global (NYSE:CARR), Trane Technologies (NYSE:TT) and Johnson Controls (NYSE:JCI).
Carrier remains Citi’s preferred name given its significant European presence, with more than 20% of group revenue generated by its Climate Solutions Europe business. The company also maintains leading positions in both the commercial and residential HVAC markets across the region.
Citi added that Carrier’s European heat-pump business continues to perform well, while demand indicators in Germany remain encouraging despite the latest heatwave.
Although Europe contributes a smaller proportion of revenue for Trane Technologies and Johnson Controls, both companies are expected to benefit from rising investment in cooling infrastructure and energy-efficient climate technologies across the continent.
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