As one of the larger multinational companies involved in the HVAC&R sector, Danfoss has just released its international results. The company describes its results as “very strong”.
Danfoss’ transformation is being driven by the shift in energy systems to renewable energy and the need for significantly higher energy productivity in machines and infrastructure. With investment, the company is focused on long-term value creation and claims it has “never seen better opportunities”.
Key figures for 2022
- Sales in 2022 exceeded expectations, up 36% to EUR10.3-billion. Organic growth was up 15%.
- Operating profits (EBITA) up 26% to a strong EUR1.2-billion with a margin of 11.9%, which was within range of guidance.
- Growth in all regions and especially in North America that grew by 71% over the past year.
- Strongly positioned for future growth with significant investments in electrification with the creation of Semikron Danfoss, taking a leading position in power electronics and electrification.
- Innovation spend up 39% to EUR457-million, and investments in production capacity, regionalisation, and digital solutions up 44% to EUR531-million.
- ESG data quality improved and we report solid progress towards our target to reach zero emissions in scope 1 & 2 in 2030 in our global operations.
- Outlook 2023 sales in the range of EUR10.4-11.9-billion and EBITA margin in the range of 11.5-13.0%.
Danfoss reports its sales grew 36% compared to 2021. Organic growth was 15% with EBITA margin reaching 11.9% in 2022. This is combined with a strong free operating cash flow before M&A of EUR465-million, an increase of 16% compared to 2021. After continued high levels of strategic investments in innovation, production capacity, digital transformation, and regional growth initiatives, EBITA increased 26% to EUR1.224-million compared to 2021. Earnings were affected by the exit from Russia and the creation of Semikron Danfoss and driven by the higher topline and continued traction in managing sourcing, factory performance and pricing.
Kim Fausing, president & CEO of Danfoss, notes: “Danfoss is better positioned for growth across all regions than we have ever been. Our sales are almost distributed evenly across the Americas, Europe, and Asia with significant opportunities in all regions. As an example, we increased our sales significantly again this year in North America. With our record levels of investments in production capacity, regionalisation and digital solutions, we are targeting to further improve the service to our customers globally.”
Danfoss’ Core & Clear 2025 strategy, a green growth strategy, was launched in April 2022 with the aim of ensuring further investments in strengthening Danfoss’ three business segments and sustaining strong application know-how, sustainable innovation and leading positions.
“By increasing innovation spend by 39%, we are again demonstrating our commitment to offering best-in-class technology and solutions. We continue to invest in technologies for sustainable datacenters, 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, it was a true highlight to launch Semikron Danfoss in August and thereby establish a leading position in power electronics and electrification,” says Fausing.
Danfoss says it 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. At the same time, Danfoss is taking critical steps towards promoting Diversity & Inclusion through global employee resource groups.
Fausing says: “Our results are truly driven by our high-performing diverse teams across the world. We are taking critical steps to move the needle on Diversity & Inclusion, and it’s been great to follow the growing engagement across the organisation. In 2022, we faced a number of challenges and I am proud to see how we worked together with our customers and partners to handle those challenges best possible. Results are created by people. We are now close to 42 000 people in Danfoss and I would like to thank all my colleagues who made our results possible. Together we build a better future.”
Outlook for 2023
Danfoss has an ambition to expand or maintain market share. Sales are expected to be in the range of EUR10.4-11.9-billion for the full year. The EBITA margin is expected to be in the range of 11.5-13.0%, 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 war in Ukraine, inflation, and the pandemic, as well as the general growth rates in the world economy.
The company in its report, claims “[A] huge potential to contribute to global and regional climate goals through the technologies and solutions we bring to market”. The report says it is committed to decarbonising its global operations by 2030, which is included in the targets of the three step-change initiatives on Decarbonisation, Circularity, and Diversity & Inclusion.