"It is, of course, an extraordinary move to make an upward adjustment after the end of the fourth quarter, but since more than four weeks will pass before we publish the final accounts, we have chosen to adjust our expectations,” explains Executive Vice President and Chief Financial Officer (CFO) Ole Steen Andersen.
Since Danfoss complies with international accounting standards (IFRS), the 12 company acquisitions made in 2006 have delayed the final annual result to a certain degree.
"It will take a few more weeks before we can be absolutely sure about the 2006 results, but indications after the fourth quarter reflect the fact that our core businesses have been more successful than we anticipated and that we have not faced the dampening effect which we expected,” says Ole Steen Andersen.
In spite of the fact that Danfoss also achieved strong growth rates during the last three months of 2006, there are signs that pressure on profitability is increasing.
"We note that we are experiencing an even fiercer competition over prices on the global market compared with that of the first nine months of 2006. At the same time, the high raw material prices have taken a bite out of the profit and we have not been able to compensate through increases in the price of our products,” explains Ole Steen Andersen.
In a number of areas, 2006 was a striking year for Danfoss. The dream of achieving a breakthrough on the American market was fulfilled with the acquisition of ScrollTech and with the introduction of rules about energy consumption in air-conditioning systems. The latter led to Danfoss winning almost 30% of the market relating to energy-saving valves for air conditioning. And 2006 was also the year when the number of Danfoss employees topped 20,000 for the first time. A total of 1,000 new colleagues joined the company from the USA with the acquisition of ScrollTech, among other things, while the organic and solid growth in China resulted in almost 500 Chinese employees joining Danfoss.
Danfoss expects growth to continue in 2007 but at a slightly lower level than in 2006. Net sales are expected to be between 21 and 22 billion DKK, whereas the EBIT is expected to be between 1.6 and 1.8 billion DKK.
For further information please contact:
Executive Vice President and CFO Ole Steen Andersen: +45 74 88 21 46
Senior Vice President, Corporate Communications & Reputation Management, Ole Daugbjerg:
+45 74 88 20 08
