We have entered a new era where the future energy system is electric and where improving energy efficiency in machines, infrastructure, and industry is critical to delivering an affordable, secure, and decarbonized future.

Being part of the solution to build a better future is what our purpose in Danfoss is all about. We continue to transform and invest in our green growth strategy. This is key to us as we continue to develop even closer relationships with our customers and partners. We will continue to deliver sustainable innovations that increase energy efficiency, enhance machine productivity, reduce emissions, and enable electrification. This is a key part of our green growth strategy and central to our sustainability and ESG goal of becoming our customers’ preferred decarbonization partner.

This year, we celebrated our 90-year anniversary, and I would like to sincerely thank our customers and partners for the support and cooperation throughout the years. Partnering across the entire value chain has never been more important than it is today.

With Core & Clear 2025, our green growth strategy, and our highly engaged teams across Danfoss, we are well on the way towards 2025. I am excited about our strong portfolio and progress in both our core business and high-growth opportunities and would like to highlight the following:

• We continued to strengthen our core business with significant investments in innovation and building a more resilient supply chain by further regionalizing and adding new capacity.
• We are well on track with integrating our transformational acquisitions, Eaton’s hydraulics business in Power Solutions and BOCK® Compressors in Climate Solutions, as well as establishing Semikron Danfoss as part of Power Electronics and Drives.
• We continue to focus on offering a broad set of competitive and innovative solutions for several high-growth verticals, for example, data centers and electrification of heating systems with commercial heat pumps.
• We invest to build a leading position in electrification by creating a strong offering for EVs, trucks, off-highway machines, marine vessels, and hydrogen production.

Our results 2023

The post-pandemic recovery of our markets and businesses has been very strong. However, during the second half of 2023, high inflation and interest rates impacted the market, creating a more challenging business environment.

Despite the increasing headwinds, we delivered a robust result, while continuing to make significant investments in capacity, innovation, and digitalization. I would like to highlight the following:

• Our EBITA was up 10%, leading to an EBITA margin of 12.6%. EBITA excluding integration cost and other operating income and expenses, reached 13.7%.
• We delivered a record-level cash flow of EUR 692 million, up 49%.
• Our growth in local currency was 7%. We saw positive growth in North America and Europe. Asia Pacific sales growth was negative, mainly driven by the economic slowdown in China. India continued to deliver a strong growth performance.
• Our transformation continued with high investment in innovation and R&D that increased to 4.6% of sales and CapEx at record levels of EUR 596 million.
• We continued to decouple our organic growth from our own emissions. In 2023, our scope 1 and 2 emissions, excluding the newly acquired Semikron and BOCK® Compressors, decreased by 18%, despite organic sales growth of 2%. And for scope 3 emissions, we have clear roadmaps in place to reduce our carbon footprint by 15% from 2019 to 2030.

The more challenging business environment in the second half of 2023 has continued into 2024. However, we remain focused on serving and delivering strong value to our customers and partners all over the world. Close partnerships have never been more important, and we are more than ready to continue our collaboration in 2024.

To conclude, I would like to sincerely thank my 42,000 colleagues all around the world for the engagement and great contributions over the year.

Kim Fausing
President and CEO