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Ingersoll Rand’s Position in the Global HVAC Industry

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Mar. 16 2016, Updated 9:05 a.m. ET

Ingersoll Rand and the HVAC industry

Ingersoll Rand (IR) has been making air compressors for more than 150 years. The company claims to be technologically advanced and a leader in the field.

The HVAC (heating, ventilation, and air conditioning) equipment market can be divided into heating (furnaces, heat pumps, and boilers), ventilation (humidifiers-dehumidifiers and air pumps–ventilation fans), and air conditioning (room air conditioners, coolers, unitary air conditioners, and others).

The players in the HVAC industry include AB Electrolux, Lennox International (LII), Carrier, Haier, Panasonic, Daikin Industries, LG, and Samsung Electronics.

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The HVAC industry can be further classified into industrial, residential, and commercial segments. The largest share of the overall market and demand for HVAC equipment comes from the commercial sector. The commercial sector accounts for more than a third of the global market. In this sector, the tourism and construction industries account for most of the demand for HVAC equipment.

The residential sector is experiencing growth, but the industrial sector is expected to lose market share by 2022.

The global HVAC equipment market can be further divided up on the basis of geography, such as North America, Latin America, Asia-Pacific, Europe, the Middle East, and Africa. Asia-Pacific dominates the global HVAC equipment industry, accounting for more than 50% of the overall market.

Demand drivers and concerns

A demand driver for the HVAC industry is growth of the economy. Upgraded technologies and acceptance of cutting-edge innovations by potential consumers have also led to growth in this industry.

According to research and market analysis, the global HVAC market is expected to grow at a 7% CAGR (compound annual growth rate) by 2020. The demand for HVAC products is mainly driven by factors such as rising population, revival in the housing market, and an increase in consumer income levels in emerging markets. It’s also driven by the development of reliable energy resources and growing commercial and industrial units.

Ingersoll Rand is part of the SPDR S&P 500 (SPY). Some of the other players in the HVAC space are Honeywell (HON), ABB (ABB), Atlas Copco, and Lennox International (LII).

Next, we’ll take a look at Ingersoll Rand’s growth expectations in a challenging environment.

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