Danfoss sales above 10bn, highest investment levels

Danish energy company, Danfoss’ 2022 results demonstrated growth potential in products and solutions that contributed to meeting global and regional climate goals.

The annual reports stated that sales grew 36% compared to 2021. Organic growth was 15% with EBITA margin reaching 11.9% in 2022. This is combined with operating cash flow before mergers and acquisitions (M&A) of €465m, an increase of 16% compared to 2021. After continued levels of investments in innovation, production capacity, digital transformation, and regional growth initiatives, EBITA increased 26% to €1,224m compared to 2021.

However, earnings were affected by Russia’s exit and the creation of independent manufacturer of power semiconductor components, Semikron Danfoss, driven by the higher top-line and continued traction in managing sourcing, factory performance, and pricing.

Kim Fausing, president and CEO of Danfoss

“Sales are distributed across the Americas, Europe, and Asia. We increased sales again this year in North America. With record levels of investments in production capacity, regionalisation, and digital solutions, we are targeting to improve the service globally,” said president and CEO of Danfoss, Kim Fausing.

Launched in April 2022, Danfoss’ core and clear 2025 strategy — a green growth strategy — aims to ensure investments in strengthening its three business segments and sustaining application know-how, innovation, and leading positions.  

“By increasing innovation spend by 39%, we invest in technologies for data centres, the fast-growing market for heat pumps and energy efficiency solutions, autonomous vehicles, the electrification of machines and marine vessels, and mobile machinery as well as power-to-x and battery energy-storage systems. Finally, the launch of Semikron Danfoss in August established a leading position in power electronics and electrification,” said Fausing.

Danfoss is determined to decouple its carbon impact from its own business growth with technologies for energy efficiency, sector integration, linking various energy carriers, and electrification. Adjusted for acquisitions, Danfoss delivered a 7% decrease in scope 1 and 2 emissions in 2022 while growing 15% organically. Danfoss is also taking steps towards promoting diversity and inclusion through global employee resource groups.

Continuing its ambition to expand or maintain market share, sales are expected to be in the range of €10.4-11.9bn for the full year. The EBITA margin is expected to be in the range of 11.5-13%, following continued integration of already acquired businesses as well as investments in the development of new products and solutions. The expected growth and profitability performance is dependent on the development of global supply chain disruptions, the Ukraine war, inflation, and the pandemic, as well as the growth rates in the world economy.

Danfoss remains committed to decarbonising global operations by 2030, which is included in the targets of the three step-change initiatives on decarbonisation, circularity, and diversity and inclusion.