Parker-Hannifin’s fiscal 2026 10-K shows a year of higher sales, wider margins, and a much larger aerospace contribution, with tariff refunds also boosting results.
Net sales rose to $21.499 billion from $19.850 billion, up 8.3% year over year. Management said the increase was driven by 6.6% organic growth, with the rest coming from acquisitions and divestitures. Acquisitions added about $91 million to sales, while currency reduced reported growth by 1.2 percentage points and divestitures reduced it by 0.7 points.
Gross profit margin improved to 37.7% from 36.9%. Selling, general and administrative expenses increased to $3.468 billion from $3.255 billion, but fell slightly as a share of sales to 16.1% from 16.4%.
Net income attributable to common shareholders increased to $3.648 billion from $3.531 billion. The effective tax rate rose sharply to 20.0% from 14.0%.
Interest expense declined to $401 million from $409 million, helped by lower average rates on commercial paper borrowings. Other expense, net was $330 million, compared with $456 million in the prior year.
A notable item in the fourth quarter was an $84 million reduction to cost of sales tied to IEEPA tariff refunds received from the U.S. government. Parker said it has applied for additional refunds, but recorded no receivable because the amount and timing remain uncertain.
Segment performance
Diversified Industrial Net sales: $14.438 billion, up from $13.665 billion Segment operating income: $3.440 billion, up from $3.120 billion * Segment operating margin: 23.8%, up from 22.8%
Within Diversified Industrial: North America sales rose to $8.392 billion from $8.134 billion International sales rose to $6.046 billion from $5.531 billion
Management said Diversified Industrial sales rose 5.7%, with 3.4% organic growth. The 2025 divestiture of the composites and fuel containment and non-core filtration businesses reduced 2026 sales by about $146 million, while the Curtis acquisition added about $237 million. North American organic sales rose 3.1%, or $252 million, led by in-plant and industrial equipment, aerospace and defense, and off-highway demand. International organic sales rose 3.9%, or $218 million, with Asia Pacific strength in electronics and semiconductor and in-plant and industrial equipment markets.
Aerospace Systems Net sales: $7.061 billion, up from $6.185 billion Segment operating income: $1.833 billion, up from $1.441 billion
Aerospace Systems accounted for most of the company’s incremental operating income, with segment profit up $392 million year over year.
Companywide operating income
Total segment operating income increased to $5.273 billion from $4.561 billion. After $205 million of corporate general and administrative expense, Parker reported income before interest and other items of $5.068 billion, up from $4.347 billion. Income before income taxes rose to $4.563 billion from $4.107 billion.
Other expense detail
The company’s $330 million of other expense, net included: $31 million foreign currency transaction gain $218 million income from equity method investments $64 million non-service retirement benefit income $23 million insurance-related charges * $14 million interest income
Parker’s strongest line items in 2026 were sales, gross margin, and aerospace operating income; the biggest one-time boost was the $84 million tariff refund recognized in cost of sales. As a result of these announcements, the company's shares have moved -0.15% on the market, and are now trading at a price of $998.58. For the full picture, make sure to review Parker-Hannifin Corp's 10-K report.
