Inspired by our purpose, we are engineering solutions that increase machine productivity, reduce emissions, lower energy consumption, and enable electrification. Driven by our new LEAP 2030 strategy, we continue to strengthen customer partnerships and competitiveness, and to demonstrate resilience in the market. With a strong balance sheet and record-high cash flow, we are well positioned to continue investing in the future.
2025 was a year that demonstrated Danfoss’ resilience and our proactive management of our business performance over the cycle. We continued to strengthen our customer partnerships and our leading global positions across our three core business segments. With our operating model in place, we launched LEAP 2030, a bold, five-year strategy that is already generating initial results.
Continuously improved financial performance
Throughout 2025, our growth momentum improved significantly, and we delivered organic growth in the second half of 9%. With a strong balance sheet and record high cash flow, we are well positioned to continue investing in our business, driving organic and inorganic growth.
While we saw strong sales momentum in China throughout the year, signs of recovery in Europe remained less pronounced. Our strong growth in the US was due primarily to growth in our data center business, though it was balanced by lower demand in the US agriculture market.
Despite a high degree of localized production, tariffs continued to impact our business, and we worked closely with customers and partners throughout the year to mitigate the effects.
Sustainability drives competitiveness
Sustainability is at the core of our business and our LEAP 2030 strategy.
In 2025, five years ahead of plan, we achieved our SBTi-validated target to reduce our own emissions (scope 1 and 2) by 46.2% by 2030. In 2025 alone, we reduced our own emissions by 33%. We reaffirmed our commitment to decarbonization with an updated near-term target and a new long-term target, to achieve net-zero across the value chain by 2050.
We also improved our rating scores from EcoVadis and CDP. This affirms our role as a leader in sustainability and a trusted partner in helping our customers achieve their sustainability goals competitively.
Our LEAP 2030 strategy
Based on strong megatrends, we see significant opportunities ahead for Danfoss and our new LEAP 2030 strategy sets clear direction for the next phase of our transformation. It builds on our operating model, which was successfully executed at record speed and enables end-to-end accountability in our businesses for faster decision-making for our customers. Now in full execution, we are focused on further strengthening our position as a resilient partner for our customers and creating long-term value for all our stakeholders.
I am pleased to share a few highlights:
The broadest portfolio in the industry
We invest to deliver the broadest portfolio of innovative, sustainable, and competitive technologies and solutions in the industries we serve. This is strengthened by our state-of-the-art Application Development Centers and laboratories where customers experience first-hand the integration and optimization of our technologies within their own applications.
Highlights from 2025 include the acquisition of hose fittings manufacturer Hydro Holding by our Danfoss Power Solutions segment. Hydro Holding strengthens our leading position in fluid conveyance for mobile and industrial hydraulics as well as data centers.
We also continue to strengthen our electrification portfolio, which includes power semiconductor modules, variable speed drives, and solutions for the electrification of heating systems and smart, digitized district energy. Our electrification portfolio also supports applications in marine and power conversion, energy storage, and off highway electrification. As part of our active portfolio management, we have taken steps to find the best future owner of the Automotive Electrification business.
Investing in sustainable innovation and scaling high-growth industries
Our commitment to deliver value to our customers through innovation and technology leadership is a key element of our LEAP 2030 strategy and drives our investment in R&D, which was 5.3% of sales in 2025.
For example, our Danfoss Climate Solutions segment invested in expanding the range of scroll compressors with the next generation for high-temperature heat pumps. Danfoss Power Electronics and Drives has strengthened the intelligent power conversion offering by expanding the iC7 Hybrid and iC7 Marine product range. Danfoss Power Solutions launched X1P, its new platform of open-circuit piston pumps, delivering unmatched performance, reliability, and flexibility in a compact design.
In 2025, investing to scale and serve high-growth industries like data centers was of key importance, with digitalization and AI driving the need for innovative and energy-efficient technologies. We partner and grow with hyperscalers, co-locators, and chip suppliers to set future standards. We significantly invested across our three business segments to expand our offering and scale our operations in order to meet customer demands.
Further regionalizing our manufacturing footprint
As a global company, we source, produce, and deliver close to our customers to drive resilience and increase competitiveness. In 2025, we further expanded our global factory footprint across the Americas, Europe, and Asia to better serve customers locally.
A strong digital backbone in place
Furthermore, we continued to realize the benefits of our significant investment in our digital infrastructure, clean data, and automated processes. We can now apply AI seamlessly where it creates real value – enhancing speed, accuracy, and relevance to improve the customer experience and productivity. Today, 75% of all customer orders are received and handled digitally with significant additional potential by deploying AI.
Engaged global teams
Key to the successful execution of our LEAP 2030 strategy is the strong engagement and determination across our global teams to drive impact. Despite the significant organizational changes and the volatile external environment, employee engagement remained high. Our global engagement survey reached a record-high response rate of 93%, with high engagement levels comparable to those seen in previous years.
It is a source of pride to witness our global teams, who live the Danfoss behaviors every day, demonstrate the entrepreneurial spirit and growth mindset grounded in our Danfoss DNA. They are key drivers of our improved performance in 2025.
Uniquely positioned for the future
The world remains volatile, and this is unlikely to change in the near term. Yet as I reflect on 2025, I am proud of what we have achieved together at Danfoss. I would like to sincerely thank our engaged global teams for creating impact throughout the year.
We are convinced that our commitment to strong partnerships with our customers and continued investments in the future are instrumental to success and to delivering long-term economic and sustainable value to all our stakeholders.
My sincere gratitude also extends to our customers and partners for their ongoing trust and collaboration.
Guided by our inspiring purpose to engineer a better future, Danfoss is uniquely positioned to capitalize on the significant opportunities created by strong megatrends. With our decentralized operating model in place and our LEAP 2030 strategy in full execution, I am confident the best days lie ahead for Danfoss.
Kim Fausing
President & CEO
