Danfoss delivered strong results and continued the high level of investment in the core businesses to remain at the forefront.
In 2019, Danfoss increased the sales by 3% to EUR 6.3 billion (S$9.7 billion) and delivered strong operating profits (EBITA), that grew 6% to EUR 771 million (S$1.18 billion) with an EBITA margin of 12.3% – a record high operating profit level from a historical perspective. Cash flow from operating activities increased 17% to a very strong EUR 789 million (S$1.2 billion).
”2019 was a good year for Danfoss. We increased our earnings and we grew despite difficult market conditions. The global mega-trends continue to transform the world, creating new opportunities for Danfoss. For example, the high global focus on solving climate changes is creating increasing demand for technologies and solutions within energy efficiency, sector coupling, and electrification and green energy. In this context, Danfoss’ solutions are more relevant than ever before,” said Kim Fausing, Danfoss President & CEO.
“The centre of our strategy is long-term value creation,” Kim Fausing explained. “The best way to generate value is to ensure that our core businesses maintain their leading positions globally and that we stay at the technology forefront. At the same time, we have the highest employee engagement ever. Danfoss is and must be the preferred global technology partner for our customers and partners, and that is why we are continuing our targeted investments in the future.”
In 2019, Danfoss continued the high level of investment in new innovative solutions. This was reflected in the 7% increase of the innovation expense to EUR 272 million (S$417.7 million), equal to 4.3% of sales. To further strengthen the business segments, Danfoss acquired four companies in 2019. These targeted-acquisitions have added new technologies to the portfolio; for example, to electrify buses, trucks, off-highway vehicles and marine vessels, and smart solutions based on artificial intelligence to optimise heating systems in buildings and district energy networks. Most recently, Danfoss entered into an agreement to acquire Eaton’s hydraulics business to become a global leader within mobile and industrial hydraulics, which is one of Danfoss’ core businesses.
From Annual Report 2019:
- CO2 neutral in 2030: Danfoss aims to reach a new ambitious target to become CO2 neutral by 2030 at the latest. Since 2007, Danfoss has reduced its energy intensity by 45% and CO2 emissions by 33%, primarily driven by energy-saving projects in the company’s largest factories around the world. Read more in the Sustainability Report 2019.
- 30% female leaders in 2025: Danfoss has now set new ambitious targets to reach 25% female leaders by 2022 and 30% female leaders by 2025. In 2019, Danfoss reached the target of having 20% female leaders globally. Read more in the Sustainability Report 2019.
Key figures 2019
- Sales increased by 3% to EUR 6.285 million (S$9.653 million), corresponding to 1% growth in local currency.
- Operating profit before acquisition-related amortisation (EBITA) increased by 6% to EUR 771 million (S$1.18 billion). The EBITA margin was 12.3% (2018: 11.9%).
- Net profit was up 8% to EUR 502 million (S$771 million).
- Cash flow from operating activities increased 17% to EUR 789 million (S$1.2 billion).
- Investments in innovation increased by 7% to EUR 272 million (S$417.7 million), corresponding to 4.3% of sales (2018: 4.2%).
Despite the current volatility, Danfoss expects to continue to expand or maintain its market share, while maintaining the profitability measured as margin at the 2019 level, following continued investments in sustainable value creation.
The outlook excludes any impacts of the acquisition of Eaton’s hydraulics business. The transaction is expected to close by the end of the year.