Danfoss persisted in its aggressive investments to broaden its range of competitive and inventive solutions. Despite facing a slower growth landscape, the company managed to achieve a 10% rise in earnings and an impressive 49% surge in cash flow. In 2023, Danfoss saw a notable 18% reduction in scope 1 and 2 emissions, showcasing its commitment to sustainability and efficiency, which was achieved independently from the organic sales growth of 2%.
Danfoss engineers innovative solutions that enhance machine productivity, diminish emissions, reduce energy consumption, and facilitate electrification. The company’s technologies find application in various sectors including refrigeration, air conditioning, heating, power conversion, motor control, industrial machinery, automotive, marine, and off- and on-highway equipment.
The company also offers solutions for renewable energy like solar and wind power, along with district-energy infrastructure for urban areas. With a history dating back to 1933, Danfoss remains family- and foundation-owned, with a workforce exceeding 42,000 employees. Its global reach extends to more than 100 countries through a network of 100 factories.
Danfoss experienced positive growth in 2023, continuing its commitment to sustainable investments outlined in the Core & Clear 2025 strategy. Despite facing challenges in the market during the latter part of the year, the company achieved financial results that aligned with its projections. Sales rose by 7% in local currency from 2022, and the company achieved an EBITA margin of 12.6% in 2023.
Additionally, Danfoss achieved a record-level free operating cash flow after financial items and tax, amounting to EUR 692 million, a notable increase of 49% compared to the previous year. EBITA also saw a significant growth of 10%, reaching EUR 1,345 million compared to 2022.
Ravichandran Purushothaman, serving as the President of Danfoss India, expressed his satisfaction at the company’s ongoing positive trajectory despite facing global economic challenges. He emphasized Danfoss’s unwavering dedication to innovation and sustainability, which has resulted in remarkable achievements in 2023. This includes a notable 7% increase in sales and a substantial 18% reduction in scope 1 and 2 emissions.
He underscored Danfoss’s collaborative efforts with communities worldwide to highlight the significance of energy efficiency in shaping a sustainable future. Looking ahead, he stressed the importance of recognizing the collective impact of conserving energy, reducing emissions, and addressing climate change.
With a clear roadmap to decarbonize operations by 2030, coupled with strategic agreements in key markets such as China and North America, Danfoss is well-positioned to enhance its impact and foster sustainable growth in the Indian market and beyond.
Purushothaman emphasized Danfoss’s existing expertise and technology to drive decarbonization through energy efficiency, advocating a three-step approach encompassing rapid and cost-effective decarbonization, energy consumption reduction, energy recovery, sector coupling, and renewable energy utilization.
Kim Fausing, the President & CEO of Danfoss, echoed similar sentiments regarding the company’s endeavors. He highlighted the emergence of a new era where the future energy system revolves around electricity, emphasizing the critical role of enhancing energy efficiency across various sectors to ensure an affordable, secure, and decarbonized future.
Fausing noted the company’s bold investments in expanding its range of competitive and innovative solutions in core business areas and high-growth sectors such as data centers, electrification of heating systems, electric vehicles (EVs), on- and off-highway vehicles, marine vessels, and hydrogen production throughout 2023.
In addition to significant investments in Danfoss’s core business and emerging high-growth opportunities, the company has prioritized building a more resilient supply chain through increased regionalization and capacity expansion. The integration of recent acquisitions remained on track in 2023, demonstrating Danfoss’s commitment to strategic growth.
The acquisition of Eaton’s hydraulics business in 2021 has solidified Danfoss’s leading position in mobile and industrial hydraulics. Furthermore, the establishment of Semikron Danfoss in 2022 aims to secure a leading position in power semiconductor modules and assemblies. Following the acquisition of BOCK® Compressors in 2023, Danfoss now boasts one of the most extensive compressor portfolios in the cooling industry.
Kim Fausing, President & CEO of Danfoss, acknowledged the challenging business environment in the second half of 2023, characterized by high inflation and interest rates, which has continued into 2024. Despite these challenges, Danfoss remains steadfast in implementing its green growth strategy and delivering substantial value to customers and partners worldwide.
Danfoss has set a clear target to achieve carbon neutrality in its operations by 2030, with existing agreements in place to guarantee a 30% reduction in emissions. These agreements include two long-term power purchase agreements, one in China and another in North America, which will be effective from 2024 and 2025 respectively.
In 2023, the company successfully decreased its Scope 1 and 2 emissions by 18% (excluding acquisitions), while maintaining a 2% organic sales growth. “It’s inspiring to witness our global teams’ commitment to implementing our sustainable growth strategy, achieving a decoupling of our organic growth from our emissions,” stated Kim Fausing.
Danfoss aims to either expand its market share or maintain its current position. The company anticipates sales to range between EUR 10.0-11.5 billion for the year. The expected EBITA margin is between 11.8-13.3%, driven by the ongoing integration of acquired businesses and investments in new product development. Growth and profitability projections are subject to global supply chain stability, geopolitical conditions, inflation, and overall global economic growth.
