Danfoss continued its positive development with bold investments in its green growth strategy, Core & Clear 2025, as evidenced by its 2023 results. Despite market headwinds in the second half of the year, the company reported financial results within the range of guidance. Sales grew 7 percent in local currency compared to 2022, with the EBITA margin reaching 12.6 percent in 2023. This is combined with a record-level free operating cash flow after financial items and tax of € 692 million, an increase of 49 percent compared to 2022. EBITA increased 10 percent to € 1,345 million compared to 2022.

Proud to witness the company’s continued positive trajectory amidst global economic headwinds, Ravichandran Purushothaman, President, Danfoss India, said, “Our steadfast commitment to innovation and sustainability has enabled us to achieve remarkable results, evident in our 2023 performance with a 7 percent increase in sales and a significant reduction of 18 percent in scope 1 and 2 emissions. At Danfoss, we’re joining hands with communities worldwide to recognize the power of energy efficiency in shaping a sustainable future. As we strive towards a greener tomorrow, let’s acknowledge the impact of our collective efforts in conserving energy, reducing emissions, and mitigating climate change.”

With the company’s clear roadmap to decarbonize operations by 2030, including strategic agreements in key markets like China and North America, he continued, “We are poised to further elevate our impact and drive sustainable growth in the Indian market and beyond. At Danfoss, we have the expertise and technology already to take action on decarbonization through energy efficiency. Using the three-step process, we can achieve rapid and cost-efficient decarbonization, reduce energy consumption and waste, reuse energy through energy recovery and sector coupling, and resource energy with renewables.”

 Kim Fausing, President & CEO, Danfoss, commented, “We are entering a new era where the future energy system is electric, and improving energy efficiency in machines, infrastructure, and industry is critical to delivering an affordable, secure, and decarbonized future. In 2023, we continued with bold investments in expanding our offering of competitive and innovative solutions for our core business and high-growth opportunities like data centers, the electrification of heating systems, EVs, on- and off-highway vehicles, as well as marine vessels, and hydrogen production.”

Besides the significant investments in the company’s core business and new high-growth opportunities, it continued to invest in building a more resilient supply chain by further regionalization and adding new capacity. In 2023, the integration of its recent acquisitions continued to be on track. 

With the acquisition of Eaton’s hydraulics business in 2021, the company built a leading position within mobile and industrial hydraulics. It is targeting a leading position in power semiconductor modules and assemblies with Semikron Danfoss, established in 2022. With the acquisition of BOCK® Compressors in 2023, Danfoss now offers one of the most comprehensive compressor portfolios in the cooling industry. Fausing, added, “During the second half of 2023, high inflation and interest rates impacted the market. The more challenging business environment has continued into 2024, but we remain focused on implementing our green growth strategy and delivering strong value to our customers and partners around the world.”

Danfoss has a clear plan to decarbonize operations by 2030, and already has agreements in place that ensure a 30 percent 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, the company continued to decarbonize its own operations. Scope 1 and 2 emissions decreased by 18 percent (before acquisitions), decoupled from organic sales growth of 2 percent. “I am excited to see how our global teams continue to implement our green growth strategy and, at the same time, decouple our organic growth from our own emissions,” concluded Fausing. 

Financial outlook 2024

Danfoss has a continued ambition to expand or maintain market share. Sales are expected to be in the range of € 10.0-11.5 billion for the full year. The EBITA margin is expected to be in the range of 11.8-13.3 percent, following the 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 stability, the geopolitical environment, and inflation, as well as general global growth rates. 

Key figures for 2023

●      Sales in 2023 increased 7 percent in local currency, and 4 percent reported to € 10.7bn (2022: 10.3bn).

●      Scope 1 and 2 emissions decreased 18 percent, adjusted for the acquisition of Semikron and BOCK® Compressors.

●      Investments in innovation (R&D) increased 7 percent to € 487m (2022: 457m), corresponding to 4.6 percent of sales (2022: 4.5 percent).

●      Investments (CapEx) excluding M&A increased 12 percent to € 596 million (2022: 531m).

●      Operating profit (EBITA) increased 10 percent to € 1,345 million (2022: 1,224m), leading to an EBITA margin of 12.6 percent (2022: 11.9 percent). 

●      Net profit increased 20 percent to € 819 million (2022: 683m).

●      Free operating cash flow (after financial items and tax) amounted to € 692 million (2022: 465m).

●      Lost Time Injury Frequency (LTIF) at record low 1.2 (2022: 1.6).

●      42,054 employees (2022: 41,928).

For more information: www.danfoss.com