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Danfoss A/S: Third quarterly report 2008

10 November 2008

“Global recession has caused noticeable uncertainty on a range of the markets which Danfoss services. In spite of the fact that Danfoss has managed to achieve some sales progress, we have to accept that it will not be possible to reach our financial targets for 2008. At the same time, we must recognise the nervousness and reluctance which is increasingly characterising the general market situation. Therefore, a credible anticipation of how the next months will develop is more difficult than usual.

Consequently, Danfoss has begun to perform adjustments to the organisation as demanded by the acutely worsened market prospects. We have chosen to implement them, even though it will require us to make provisions which will further reduce the result for the year. Danfoss’ total 2008 result will also be considerably affected by accounting adjustments in the wake of the acquisition of the controlling interest in Sauer-Danfoss. The adjustments will blur the fact that the fundamental business has developed reasonably, even when we allow for the general recession.”

Niels B. Christiansen, President and CEO, Danfoss A/S

Highlights from the first three quarters of 2008:

The comparison figures are affected by the fact that Sauer-Danfoss is not included in the 2007 figures, whereas Sauer-Danfoss is fully consolidated from and including the third quarter of 2008.

Net sales were 19.9 billion DKK, which equals growth of 19%. Growth was 5%, when adjusted for acquisitions, divestments and foreign currency translations, compared to 14% in the same period the year before.
The profit before other income and expenses was 1,024 million DKK, whereas the operating profit (EBIT) was 1,035 million DKK. The underlying business developed reasonably during the first six months of the year, but a large proportion of the business was hit by the growing reluctance and recession on the global markets at the end of the third quarter. The result is affected by accounting adjustments following the acquisition of the controlling interest in Sauer-Danfoss.
The profit after tax was 571 million DKK, compared to 869 million DKK in the year before. The 2007 result included extraordinary income from the sale of Damcos A/S, amounting to 186 million DKK.
The number of employees grew to 32,806 from 21,826 in the third quarter of 2007.

Expectations for 2008:
The development of the Group’s main markets during the third quarter and the major uncertainty concerning the development of the fourth quarter have caused Danfoss to downplay its expectations for the year as a whole, since they have furthermore been substantially affected by accounting adjustments following the acquisition of the controlling interest in Sauer-Danfoss.

Net sales (including Sauer-Danfoss) are expected to be between 27 and 28 billion DKK.
EBIT is expected to be between 0.6 billion DKK and 1 billion DKK, after the performance of all the accounting impacts of the acquisition of the shares in Sauer-Danfoss. Therefore, due to accounting reasons, Sauer-Danfoss will have a negative impact on the total 2008 EBIT.

Please address any enquiries regarding this announcement to:

Niels B. Christiansen, President and CEO: +45 74 88 75 50
Ole M. Daugbjerg, Chief Reputation Officer: +45 74 88 20 08

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