Danfoss continues profitable growth
Sales grow and profits increase despite challenging market conditions. Continued high investments in innovation. Increased focus on the green transition creates new growth opportunities.
During the first nine months of 2019, Danfoss increased sales by four per cent to EUR4.8 billion, driven by the Group's core businesses and an increased global focus on energy efficiency and electrification as part of the green transition. In particular, the markets in Europe, parts of Asia, Latin America and Russia saw growth, driving the higher sales. Danfoss delivered strong operating profits (EBITA) of EUR 602 million, up by 5 per cent compared with the first nine months last year, and an EBITA margin of 12.7 per cent.
"We are satisfied with the results for the first nine months of the year. Sales of energy-efficient products and electric solutions have grown, and our earnings increased – also in the third quarter. Although we are facing some uncertainty in the global economy, we continue to see good growth opportunities as our energy-saving solutions translate into the strengthened global focus on sustainability and green transition. Concretely, we see that in the dialog with our customers, and that is of course something we pursue,” said Kim Fausing, group president and CEO.
As a technology partner, Danfoss for example plays an active role in the transformation of the entire transport sector with the development of new electric and hybrid platforms for cars, busses, ships and construction machines. Danfoss’ focus on innovation and future growth is reflected in the investment in research and development of new products of EUR 212 million during the first nine months of 2019 — an increase to 4.5 per cent of sales compared to 4.2 per cent during the first nine months last year.
“We see a significantly higher interest from our customers for close collaboration with Danfoss on the development of systems. The reason is our strong core businesses and the fact that we for several years have invested heavily in new technologies and software. This means that we today are at the forefront especially within electrification and digitalization. And that is also the reason why we — despite the increased volatility — continue to take an optimistic view on the future,” Fausing concluded.
Key figures from the first nine months of 2019:
- Sales increased by four per cent to EUR 4,755 million (Q3 2018: 4,569 million), corresponding to two per cent growth in local currency.
- Operating profit before acquisition-related amortization (EBITA) increased by five per cent to EUR 602 million (Q3 2018: 576 million). The EBITA margin was 12.7 per cent (Q3 2018: 12.6 per cent).
- Net profit for the first nine months was EUR 383 million (Q3 2018: 374 million).
- Investments in innovation increased by 10 per cent to EUR 212 million (Q3 2018: 192 million), corresponding to 4.5 per cent of sales (Q3 2018: 4.2 per cent).
Changes in the financial reporting:
As a result of the increased activity of acquisitions and divestments of companies, Danfoss has as of September 2019 chosen the financial key figure Operating profit before acquisition-related amortization (EBITA) as the measurement of profitability performance. EBITA is defined as the profit before interest, taxes, and amortization, gains and losses related to acquisitions and divestments. EBITA measured against sales leads to the EBITA margin. EBITA is also used by many companies, which Danfoss compares itself to.