Danfoss continues its positive development despite increasing headwinds in the global economy

CEO Kim Fausing, Danfoss (Photo: Business Wire)

In 2023, Danfoss continued to boldly invest in expanding the range of competitive and innovative solutions. Despite a slower growth environment in 2023, Danfoss reported a 10% increase in earnings (EBITA) and a 49% increase in cash flow. In 2023, Scope 1 and Scope 2 emissions (before acquisitions) fell by 18%, decoupled from organic sales growth of 2%.

• Sales in 2023 rose 7% in local currency and reported 4% to 10.7 billion euros.

• Operating profit (EBITA) increased by 10% to EUR 1,345 million, with a margin of 12.6% compared to 11.9%. EBITA excluding integration costs and other operating income and expenses reached 13.7%.

• Record level of free operating cash flow after financial items and taxes of 692 million euros, an increase of 49%.

• Positive growth in North America and Europe. Sales growth in Asia Pacific was negative, mainly due to the slowdown in China. India continued to post strong growth performance.

• Innovation investments increased by 7% to a record EUR 487 million and investments in capacity and digitalization increased by 12% to a record EUR 596 million.

• There are plans to decarbonise our own operations (Scope 1 and 2) by 2030. We have already agreed to achieve 30% of our 2030 decarbonisation target. All segments have roadmaps in place to achieve their Scope 3 emissions targets and reduce our carbon footprint by 15% from 2019 to 2030.

• Outlook 2024: Sales in the range of EUR 10.0-11.5 billion and EBITA margin in the range of 11.8-13.3%.

NORDBORG, Denmark, March 6, 2024–(BUSINESS WIRE)–With our 2023 results, Danfoss' positive development continued with bold investments in our green growth strategy Core & Clear 2025. Despite market headwinds in the second half of the year, Danfoss reported financial results that were in line with forecast.

Revenue increased 7% in local currency compared to 2022, with the EBITA margin reaching 12.6% in 2023. This is combined with a record free operating cash flow after financial items and taxes of EUR 692 million, an increase of 49% compared to 2022. EBITA increased by 10% compared to 2022 to EUR 1,345 million.

The story goes on

“We are entering a new era where the future energy system is electric and improving energy efficiency in machinery, infrastructure and industry is critical to create an affordable, secure and decarbonized future. In 2023, we continued bold investments to grow our business.” “We offer competitive and innovative solutions for our core businesses and high-growth opportunities such as data centers, electrification of heating systems, electric vehicles, on- and off-highway vehicles, ships and the Hydrogen production,” says Kim Fausing, President and CEO of Danfoss.

In addition to significant investments in our core business and new high-growth opportunities, we continued to invest in building a more resilient supply chain through further regionalization and building new capabilities.

In 2023, the integration of our recent acquisitions continued according to plan.

With the acquisition of Eaton's hydraulics business in 2021, we have established a leading position in mobile and industrial hydraulics. With Semikron Danfoss, founded in 2022, we aim for a leading position in power semiconductor modules and assemblies. With the acquisition of BOCK® Compressors in 2023, Danfoss now offers one of the most comprehensive compressor portfolios in the refrigeration industry.

“In the second half of 2023, high inflation and interest rates impacted the market. The more difficult business environment has continued into 2024, but we remain focused on executing our green growth strategy and delivering strong value to our customers and partners around the world,” says Kim Fausing, President and CEO of Danfoss.

Danfoss has a clear plan to decarbonize operations by 2030 and we have already reached agreements that ensure a 30% reduction in emissions. These agreements include two long-term power purchase agreements in China and North America, effective from 2024 and 2025, respectively. In 2023, we continued to decarbonize our own operations. Scope 1 and Scope 2 emissions fell by 18% (before acquisitions), decoupled from organic sales growth of 2%.

“I’m excited to see how our global teams continue to implement our green growth strategy while decoupling our organic growth from our own emissions,” says Kim Fausing.

Financial outlook 2024

Danfoss continues to aim to expand or maintain its market share. For the year as a whole, sales are expected to be in the region of 10.0 to 11.5 billion euros. The EBITA margin is expected to be between 11.8 and 13.3% due to the continued integration of already acquired companies and investments in the development of new products and solutions. The expected growth and profitability development depends on the development of global supply chain stability, the geopolitical environment and inflation as well as general global growth rates.

Key figures for 2023

• Sales in 2023 increased by 7% in local currency and reported by 4% to EUR 10.7 billion (2022: 10.3 billion).

• Scope 1 and Scope 2 emissions fell by 18%, adjusted for the acquisition of Semikron and BOCK® Kompressoren.

• Investments in innovation (R&D) increased by 7% to EUR 487 million (2022: 457 million), which corresponds to 4.6% of sales (2022: 4.5%).

• Investments (CapEx) excluding M&A increased by 12% to EUR 596 million (2022: 531 million).

• The operating result (EBITA) increased by 10% to EUR 1,345 million (2022: 1,224 million), resulting in an EBITA margin of 12.6% (2022: 11.9%).

• Net profit increased by 20% to EUR 819 million (2022: 683 million).

• Free operating cash flow (after financial items and taxes) amounted to 692 million euros (2022: 465 million).

• The Lost Time Injury Frequency (LTIF) is at a record low of 1.2 (2022: 1.6).

• 42,054 employees (2022: 41,928).

Read more about the 2023 financial results here.

About Danfoss A/S:
Danfoss develops solutions that increase machine productivity, reduce emissions, reduce energy consumption and enable electrification. Our solutions are used in areas such as refrigeration, air conditioning, heating, power conversion, motor control, industrial machinery, automotive, marine, and off- and on-highway equipment. We also offer renewable energy solutions such as solar and wind power as well as district energy infrastructure for cities. Our innovative technology dates back to 1933. Danfoss is a family and foundation company, employs more than 42,000 people and serves customers in more than 100 countries with a global presence of 100 factories.

www.danfoss.com

View source version on businesswire.com: https://www.businesswire.com/news/home/20240306341388/en/

contacts

Mikkel Ballegaard Pedersen, PR manager
+45 26 10 95 19
[email protected]