Year in review

Annual Report 2020

Danfoss is more relevant than ever. We provide sustainable solutions that make a real impact. The global megatrends create opportunities for Danfoss, and we are well on the way to become the globally leading technology partner to deliver the innovation the world is asking for.

Watch the video with Danfoss President & CEO Kim Fausing.

Danfoss came out of 2020 with strong results and expects growth in 2021

Danfoss came out of 2020 strong results despite COVID-19. The high investments in innovation, digitalization and electrification continued. Towards the end of the year, the order books grew significantly. At the same time, Danfoss is well prepared to take in Eaton Hydraulics and ready for the global growth that is driven by the focus on green transition, infrastructure, and urbanization.

Danfoss saw the most significant impact on sales in the second quarter of 2020, followed by a gradual improvement in the second half. China especially gained traction rapidly and delivered high growth rates. In the fourth quarter, Danfoss was back to pre-COVID-19 sales levels in most markets.

All in all, sales ended at EUR 5,828m, which was 6% lower than the previous year measured in local currency. Operating profit (EBITA) reached EUR 723m, which was 6% below 2019, but with a strong EBITA margin of 12.4% versus 12.3%. Danfoss delivered a record high cash flow performance.

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Key highlights:

Strong recovery back to pre-COVID-19 activity levels in Q4 year-over-year.

The pandemic caused a sudden drop in demand in Q2, leading to net sales in 2020 of EUR 5.8bn, 7% below previous year. Growth in power modules for electric vehicles, energy-efficient compressors for cooling, industrial refrigeration, and power conversion for wind energy.

Strong profitability within range of guidance.

EBITA of EUR 723m, 6% below previous year. We managed to scale our fixed expenses to the lower sales, leading to an EBITA margin of 12.4% against 12.3%. Net profit reached EUR 435m, 13% below the previous year.

Continued high investments in the future

A high level of investments in R&D was maintained, focusing on digitalizing and electrifying our solutions. Innovation expense amounted to EUR 267m, 2% below previous year, but corresponding to 4.6% of sales against 4.3% last year.

Record cash performance

Free operating cash flow after financial items and tax (before M&A) increased 7% to EUR 493m. Our strong cash performance provides room for future growth, strategic growth initiatives and investments in industry-leading technologies to further strengthen our core businesses and ability to win market share.

Low debt

Net interest-bearing debt was reduced 49% to EUR 537m, leading to a net interest-bearing debt to EBITDA ratio of 0.6. Our continuous, strong financial performance including a low leverage ratio allows us to continue to expand and develop Danfoss as a global leader within our business areas.

Read and download a full version of Danfoss Annual Report 2020

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Supplementary reports 2020:

Sustainability Report

This report provides an insight into our initiatives within corporate social responsibility and constitutes the Danfoss Group’s “Communication on Progress” (COP) under the UN Global Compact.

Corporate Governance Report

This report details the Danfoss Group’s internal controls and risk management structure in relation to financial reporting and our compliance on the recommendations of corporate governance.

“Sustainability is important for our people, our planet and our financial performance. In Danfoss, we play a significant role in promoting energy efficiency and enabling electrification in the transition towards a world with lower carbon emissions. Our products and solutions help the world to grow in a sustainable way, and we take our own medicine optimizing our own production and services. It is not just good business – its common sense,” says Kim Fausing, President and CEO.

Read about sustainability at Danfoss