The fourth quarter of 2008 saw a dramatic slowdown in several of the Danfoss Group’s businesses. This led to an ordinary operational loss in the quarter and the first weeks of 2009 give no indication of a change any time soon. When the accounting write-downs following Danfoss’ takeover of the controlling interest in Sauer-Danfoss are included, the 2008 annual accounts will most likely show both a pre-tax and an after-tax loss, in spite of the continuing positive EBIT result – i.e. the result of the daily running of the business. The final accounts results will be available on March 30.
”Unfortunately, there were such major decreases in the net sales and profit in the last three months of 2008 that it is difficult not to anticipate a deficit for 2008. At the same time, there are no signs that the global crisis will soon turn, and so we must cut 850 positions globally to ensure that we will be able to present a reasonable operational result for 2009,” explains President and CEO Niels B. Christiansen, who stresses that the current round of job cuts does not include Sauer-Danfoss.
Consequently, the regrettable, but necessary cuts in some production areas carried out over the past months combined with the full hiring freeze throughout the Group and, most recently, the notice of the salary freeze for managers and employees, are now being followed by a round of savings and cuts focusing on a range of functions within sales, service and administration.
A total of 750 jobs within administration, sales and service will be eliminated, of which more than 200 positions will be cut in the central functions and service areas in Denmark. At the same time, notice has been given of the elimination of almost 100 positions in Danish production areas. The layoffs will take place through voluntary redundancy, elimination of vacant positions and dismissals.
”With these rather extensive reductions, we aim to take the necessary steps to make sure we focus on defending our market shares and ensuring a sound profit, even though the crisis will continue for some time,” says Niels B. Christiansen, who does not believe that any significant change will occur until at some point in 2010 at the earliest.
Part of the plan includes, among other things, stopping a number of projects in its central corporate functions and postponing activities for at least a year.
”We will do our utmost to make sure that Danfoss over the next months can continue to be the responsible and sustainable company that we perceive ourselves to be, but it is evident that we will be considerably more cautious than usual. Operating on weakened global markets such as the current ones, our first priority is the securing of our market shares, our competitiveness and our competencies within creating solutions in our core areas,” says Niels B. Christiansen.
The employees affected have been informed to the greatest extent possible. However, it should also be noted that at some locations – in accordance with rules for handling industrial disputes – initiatives have been taken to start negotiations, so that the final number of dismissals and relating details are given appropriate and necessary consideration.
For further information:
Niels B. Christiansen, Chief Executive Officer: +45 74 88 75 50
Kim Fausing, Chief Operations Officer: + 45 74 88 36 94
Ole Daugbjerg, Chief Reputation Officer: +45 74 88 20 08