Viessmann Heat Pumps Drive Demand; Carrier's CSE Commercial Turns Around in Q2 2026

Viessmann (heat pumps, boilers) market update and confidence that CSE Commercial is turning

1) Update on Viessmann markets: heat pumps and boilers (Europe, especially Germany)

Heat pumps: clear demand inflection

• Management described a “seen that inflection point on heat pumps,” with sales up 20% and residential orders up 20% in the quarter, indicating strengthening end-demand rather than only channel fill effects. ¹²³
• Heat pump demand was described as strong in Germany and “pretty uniform” across Europe (with some continuation following the war-driven natural gas price spike). ¹²³
• On policy, they expected Germany subsidy application volumes to return toward 2022 levels (all-time highs) and cited Germany having clarified the heating law while keeping key elements and subsidies in place—supportive for continued demand durability. ¹²³
• They highlighted an affordability/energy-switching “formula” preference: the natural gas to electricity ratio below 3 is something management “likes,” linking fuel economics to heat pump adoption. ¹²³

Boilers: expected decline, but consistent with the “heat pumps up / boilers down” substitution framework

• Management stated boilers will decline and that the company’s model is typically down low-to-mid single digits, but boilers were down high single digits in the quarter (which they said “impacted us a bit”). ¹²³
• The key takeaway is not that boilers are collapsing unpredictably, but that the market is moving in the expected direction: heat pumps rising and boilers declining in a structured way. ¹²³

Product/timing support: Vitocal 200 (Viessmann branded) coming in fall

• Management pointed to a new Viessmann-branded product (Vitocal 200) launching in the fall, described as maintaining the Viessmann brand and features customers expect, and said it is “really perfect” for customers. ¹²³
• They also explicitly tied preorder activity to encouragement, saying they expect this product to increase TAM and have it serve as a key offering for Germany and as a primary offering in most European countries. ³⁴⁵

2) CSE Commercial “turning”: what gives confidence, and how strong is it?

What management said about orders and the near-term outlook

• They stated that on the commercial side, orders were “in a little bit north of 20%” in the quarter, and they noted continued strength into July, citing “nice orders over these last few weeks.” ³
• Based on that, management said they were “pretty well positioned” for commercial HVAC to be up in the mid-single-digit range in the second half. ³
• In the broader context of the company’s outlook, they also connected second-half strength to backlog/orders and said the second half is expected to be up mid-single digits for movement in the relevant timeframe, but they also explicitly flagged that Europe commercial was lower than expected in the first half. ⁵

How to interpret “confidence”: orders momentum + substitution dynamics + execution/cost actions

Confidence in a “turn” typically depends on whether management has (a) demand signals (orders), (b) policy and product tailwinds, and (c) internal ability to convert orders into revenue profitably. From the excerpt:

1. Demand signal (orders):

   • The clearest quantitative demand evidence is commercial orders up >20% and continued order strength in July. ³

2. Structural market tailwinds (heat pumps and policy):

   • While heat pumps/boilers were discussed mainly in the residential framework, policy clarity and subsidy continuity in Germany support the broader heating ecosystem, and management positioned the company as “poised for some nice growth in Europe.” ²³
   • For commercial HVAC, this is not direct proof, but it reduces the risk that the commercial turnaround is purely cyclical/channel-driven. ²³

3. Product and go-to-market readiness:

   • Management’s mention of the Vitocal 200 (Viessmann-branded) and supportive preorder activity is a tangible forward indicator of product pull, which can support conversion and lead generation in commercial-adjacent segments as well. ³⁴⁵

4. Candid operational constraint: cost aggressiveness needed (important for “confidence” quality):

   • Management acknowledged an issue: they “should have been more aggressive on cost” and said they will be “aggressive on cost now.” ²
   • This is crucial intellectually honest context: even if orders are improving, converting that demand into margin-resilient growth may require operational discipline. ²⁵

Bottom line on confidence level

• Confidence appears above average for demand (orders) and directionality because management cited >20% commercial orders growth and continued strength in July, leading directly to a mid-single-digit second-half commercial HVAC growth positioning. ³
• However, the confidence is tempered by two factors evidenced in the excerpt:
  1. They admit Europe commercial was lower than expected in the first half, implying the “turn” may be more about recovery than about never having a problem. ⁵
  2. They explicitly flagged the need to be more aggressive on cost, meaning the turnaround’s sustainability will depend on execution, not just ordering momentum. ²⁵

Conclusion

• Viessmann-related European heating markets (as discussed in the excerpt) show an inflection in heat pumps: sales and resi orders up 20%, supported by Germany subsidy clarity and expected subsidy normalization, plus favorable energy economics (gas/electricity ratio). ³
• Boilers are expected to decline (model low-to-mid single digits; actual high single digits in the quarter), consistent with a substitution pattern. ³
• For CSE Commercial, management’s confidence in “turning” is grounded in commercial orders >20% growth in the quarter and continued strength into July, supporting mid-single-digit commercial HVAC growth in the second half—but operational caveats remain because management also acknowledged needing more aggressive cost action and noted Europe commercial underperformance earlier in the year. ²³⁵