Air conditioning and refrigeration equipment manufacturer, Carrier, will need to re-invent its future in the wake of the spin-off from parent company United Technologies (UTC).
Known worldwide as the company that invented air conditioning, Carrier, saw sales drop in 2019. Carrier’s sales for the year were $18.6 billion, down 1.7% on 2018.
With the separation set to be finalised in April, Carrier has confirmed that its first order of business is to reduce supply chain costs by $600 million.
Speaking at its very first investor meeting in New York this month, Carrier president and CEO, David Gitlin, said 2020 would be a year of focus with an expected mid-single-digit growth.
“Since Carrier’s founding, we’ve been leaders in inventing new solutions and entirely new industries and now we will use that leadership to create value for our future shareholders,” he said.
“We’re investing strategically and strengthening our market position with a relentless focus on customers to drive growth. At Carrier, we have a strong foundation, and our best days are ahead of us.”
UTC has confirmed the formal separation is likely to be completed by April, 2020. It follows an announcement in November 2018 that UTC will separate into three independent companies by spinning off its Carrier and Otis elevator businesses.
The spin off was first announced following UTC’s acquisition of aerospace company Rockwell Collins which made UTC an industry-leading aerospace systems supplier.
UTC chair and CEO, Gregory Hayes, described the decision as a pivotal moment in the company’s history and will place each independent company in the best position to drive sustained growth and maximise value creation.
Speaking at the announcement of its fourth quarter financial report, Hayes said operational separation activities for Otis and Carrier are substantially complete, and “we are executing the final steps required to spin both businesses as independent companies early in the second quarter.”
While Carrier sales dropped last year, UTC as a group delivered record sales of $19.6bn in the fourth quarter, up 8% on 2018.
Looking to the future, Carrier plans to invest in its global sales force and product innovation.
As well as looking to grow its service and digital offerings, Carrier is also looking to increase its penetration in the VRF air conditioning market. Although a small player in the VRF market, Carrier is looking for double digit organic growth in this sector over the next five years.
HVAC-commercial president Chris Nelson said that it saw regulatory changes and the demand for lower GWP refrigerants and greater efficiencies as an “outstanding opportunity” for the business.
Carrier also revealed plans for the refrigeration side of the business.
Last year, Carrier celebrated the installation of its 10,000th CO2 system in Europe. David Appel, president of refrigeration, revealed that it would now be looking to extend this technology into refrigerated warehousing where he said it had “inherent design advantages” over current systems.
Carrier's market-leading brands serve customers in more than 160 countries across three distinct segments – HVAC, Refrigeration and Fire & Security.
Currently known as Climate, Controls and Security (CCS), Carrier had sales totalling $17.8bn in 2017. Post-separation Carrier will continue to include commercial and residential HVAC, automated logic controls, Kidde and Edwards fire safety, as well as LenelS2 security solutions.
As an independent company, Carrier expects to drive accelerated top- and bottom-line growth through:
Investments in its sales force and product innovation;
Increasing product extensions and geographic coverage;
Growing service and digital offerings to create recurring revenue opportunities; and
Implementing tenacious cost reduction with plans for a $600 million reduction in supply chain, factory and general and administrative expenses by the end of 2022.