Danfoss delivers good first half-year

Date: 1 September 2014

The group has lifted net sales, and earnings have improved by 22%.

With moderate growth in net sales and significant improvement on the bottom line, Danfoss had a good first half-year of 2014. After the two first quarters, net sales were DKK 16,920m and net sales growth was 5% measured in local currencies. The Group’s earnings before other income and expenses were DKK 2,038m, and significantly exceeded the level of the same period last year of DKK 1,665m.

”We performed well in the first half-year, and we lived up to our expectations. We continue the good development, creating solid results in a global low-growth environment. When adjusted for currency fluctuations, which remain rather extensive, our top line is improving, and our earnings have strengthened. This proves that our strategy is working, and that our employees’ efforts are bearing fruit,” says President & CEO Niels B. Christiansen.

The improvements are broad-based across the Danfoss businesses; however Danfoss Power Solutions, which produces hydraulic components for mobile machinery, has seen the largest increase in demand. But demand for energy-saving solutions for refrigeration systems, air conditioning and speed control of electrical motors has also increased.

A large part of the total growth is driven by the development sales of Danfoss solutions in North America, where Danfoss generates close to one-quarter of its turnover. Compared to the same period last year, net sales in North America grew by 9% in local currencies. Growth in China reached 5% in local currency, whereas Europe was at the same level last year.

”It is still difficult to foresee the long-term development, but we can see that the slightly decreasing growth in developing countries and the budding optimism on the mature markets of the past few quarters continues. However, the situation remains unclear. One reason is that Europe has not really emerged from the financial dead water. So, our focus is on investing in new technologies and geographical growth pockets such as Turkey, which holds a major potential for both our cooling and heating businesses,” says Niels B. Christiansen.

Following a good first half-year, Danfoss maintains its full-year expectations for modest growth in net sales and results that will grow accordingly.

Highlights of first half-year 2014:
• Net sales were DKK 16,920m against DKK 16,815m in the year-earlier period, equal to 5% growth in local currency.
• The operating profit (EBIT before other operating income/expenses) was DKK 2,038m against DKK 1,665m in the year-earlier period, corresponding to an improvement of 22%.
• Cash flow before M&A was DKK 660m against DKK 918m last year. Cash flow was affected increased net working capital due to growing sales.

Outlook for 2014

The group maintains its expectations for the year:
Net sales are expected to show modest growth in local currencies in 2014.
The operating profit in 2014 is expected to grow in line with net sales.

For more information:
Danfoss Media Relations, tel.: +45 7020 4488