Robust results despite COVID-19
COVID-19 has impacted sales and profits in the first half – Global focus on infrastructure and the green transition makes Danfoss technologies more relevant than ever.
Danfoss sales amounted to EUR 2.9 billion in the first half, which is 10% lower than the same period last year. Operating profit (EBITA) reached EUR 309 million, 19% below the same period last year, with an EBITA-margin of 10.8% against 12.1% in the first half last year.
The first half of 2020 was affected by the COVID-19 pandemic, which continues to create global volatility and uncertainty. All regions and most of the market segments, in which Danfoss operates, have been affected. Danfoss saw the largest negative impact on sales in April and May, followed by a periodic improvement towards the end of the second quarter. On the positive side, there are signs that Danfoss sales in Asia are stabilizing, and China has regained its strength and was back with record sales in the second quarter. Across Europe, Danfoss is also seeing signs of improvement compared to the low level at the beginning of the second quarter. In contrast, sales in North America, Latin America and India continue to be hit hard by the effects of COVID-19.
"I am proud of how our teams around the world have handled the difficult situation. We have responded quickly with a focus on employee safety. We have kept our people on board, served our customers and adjusted our costs to the lower activity level. We have kept the factories going globally and strengthened our digital presence towards our customers and suppliers. At the same time, we have maintained focus on our strategic direction,” says Kim Fausing, Danfoss President and CEO.
On a national level as well as globally, work is going into advancing investments in infrastructure and the green transition as crucial tools in the recovery plans that are expected to reboot the economies on the other side of the COVID-19 crisis. In this connection, Danfoss’ solutions are relevant to several global mega trends, such as increasing electrification, urbanization and climate change.
“Even though we expect that the rest of 2020 will be impacted by the pandemic and that many markets will continue to be volatile, we expect a slow recovery. However, Danfoss has been chosen as the preferred technology partner by some of the world’s leading companies, especially within electrification, and this gives us an optimistic view on the future,” Kim Fausing concludes.
Key figures for 1st half of 2020
- Sales decreased 10% to EUR 2,864 million (H1 2019: 3,166 million) corresponding to -10% growth in local currency.
- Operating profit before acquisition-related amortization (EBITA) decreased by 19% to EUR 309 million (H1 2019: 383 million). The EBITA margin was 10.8% (H1 2019: 12.1%).
- Net profit decreased 32% to EUR 164 million (H1 2019: 242 million).
- Cash flow from operating activities increased 44% to EUR 166 million (H1 2019: EUR 115 million).
- Investments in innovation reached EUR 130 million (H12019: 140 million) corresponding to 4.6% of sales (H1 2019: 4.4%).
Outlook 2020 reinstated
On May 27, the financial guidance for 2020 was suspended due to the low visibility and increased uncertainty associated with COVID-19 and its potential impact on end markets. The uncertainty remains higher than normal but based on the performance in the first half of 2020, Danfoss is now able to reinstate guidance for the full year 2020 on level with the guidance given before COVID-19.
Despite the current volatility, we expect to continue to expand or maintain our market share, while maintaining the profitability measured as margin at the 2019 level, following continued investments in sustainable value creation. To the extent that sales are negatively impacted, Danfoss also expects to see a negative impact on the absolute result.
The outlook excludes any impacts of the acquisition of Eaton’s hydraulics business. The transaction is expected to close in the first quarter of 2021.
Due to the COVID-19 situation, it must be stressed that the basic assumptions behind the guidance are more uncertain than normal.
Danfoss Media Relations
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