Driven by the shift in energy systems from carbon-driven to renewable energy and the need for significantly higher energy productivity in machines and infrastructure, Danfoss continues its transformation. With bold investments, we continue to improve our offering of best-in-class technology and solutions to drive the green transition through energy efficiency, machine productivity, lower emissions, and electrification.

With Core & Clear 2025, our green growth strategy, and a highly engaged team, we are well on the way towards 2025. I am excited to highlight the following strategic steps in 2022:

• We launched our green growth strategy in April, including our new ESG ambition, where sustainability is at the heart of our business focusing on Decarbonization, Circularity, and Diversity & Inclusion.
• We continued to strengthen our three core segments and are on track with our integration of the transformational acquisitions. The new Power Solutions segment is building a leading position in mobile and industrial hydraulics, as well as electrification in the on- and off-highway and marine markets. With Semikron Danfoss, we have taken another important step in establishing a leading position in power electronics and electrification.
• We announced the agreement to acquire the compressor manufacturer BOCK GmbH and are looking forward to welcoming the new team to Danfoss in 2023.
• We continued our bold investments in innovation, additional capacity, new digital and electric solutions as well as our One ERP platform. We are approaching 25% of sales via e-commerce and Electronic Data Interchange (EDI).
• We are taking critical steps towards promoting Diversity & Inclusion, as we are strong believers that diverse teams lead to more innovation and drive strong employee engagement.

Our green growth strategy is focused on long-term value creation, and we are investing in significant growth opportunities like data centers, the growing market for heat pumps, and other energy-efficient solutions for the energy transition, but also autonomous machines, electrification of cars, trucks, marine vessels, and mobile machinery as well as electrification related to Power-to-X/hydrogen and battery energy-storage systems – just to mention a few.

Despite the challenges we have faced throughout the year, the strong growth momentum continued across our three segments and regions.

• Our sales reached EUR 10.3bn, up 36% since 2021, and almost doubling since 2017. Organic growth was 15%.
• We continued to globalize our business, and sales are now distributed almost evenly across the Americas, Europe, and Asia. Growth was strong across all regions except China, which has been counter cyclical since the start of the pandemic.
• EBITA was up 26% from 2021, leading to an EBITA margin of 11.9% against 12.8% last year.
• By increasing R&D investments by 39% to EUR 457m (2021: 328m), corresponding to 4.5% of sales (2021: 4.4%), we again demonstrated our commitment to differentiating through best-in-class technology and solutions.
• Furthermore, with record levels of investments in production capacity and in digital transformation, our target is to improve service to our customers.

We faced an unprecedented number of challenges in 2022, and this has impacted our customers. I am proud to see how our team worked tirelessly together with our customers and partners to handle such issues as supply chain disruptions, extraordinary rising inflation and costs, pandemic lockdowns, a cyberattack on Semikron Danfoss, and our exit from Russia.

We remain in contact with our Ukrainian colleagues every day as they continue to face an incredibly difficult time. It’s always safety first, and we are doing everything we can to keep our team in Ukraine safe and to support however we can.

Our main priority is always the health and safety of our teams, and we are proud that Lost Time Injury Frequency (LTIF) ended at another record-low level of 1.6, demonstrating our safety-first focus.

We continue our journey towards becoming carbon neutral in our global operations by 2030. As a first step, we became carbon neutral at our headquarters campus in 2022, and Danfoss’ own solutions have been instrumental in achieving significant energy savings.

I would like to sincerely thank our customers and partners for the close cooperation in this extraordinary year. I also want to thank all of my colleagues. The team is the foundation of everything we do – and essential for our continued achievements as we move towards 2025 and beyond.