Danfoss, the global leader in industrial automation and digital transformation, has reported a challenging first half of 2024. After experiencing significant growth over the past three years, the company’s latest figures reflect a dip in demand across key markets. Group sales totalled €5 billion, with EBITA standing at €533 million, marking a decrease in the EBITA margin from 12.4% to 10.6% compared to the same period last year.
The lower demand, particularly in sectors such as agriculture, construction, and automotive, has affected Danfoss’ Power Solutions segment. The construction market in Europe remains subdued, notably in Central Europe, impacting heating businesses like residential heat pumps and district heating. Additionally, reductions in OEM production schedules in the automotive and EV markets in Europe and the US have contributed to the downturn.
Despite these challenges, Danfoss has continued its commitment to innovation. The company has invested €247 million in research and development—slightly down from €249 million in the first half of 2023—but still representing 4.9% of sales. The focus remains on decarbonisation, digitalisation, and electrification, which are pivotal growth drivers for the company.
Danfoss is adapting to the current market situation by updating its operating model to support long-term growth. The new model aims to decentralise decision-making, enhance customer proximity, and streamline operations to boost efficiency and responsiveness. This restructuring includes difficult decisions, such as reducing staff numbers to eliminate duplications and improve cost competitiveness.
Kim Fausing, President & CEO of Danfoss, expressed confidence in the company’s resilience. “The current situation is challenging, but our focus remains on our long-term growth strategy. We are committed to navigating this cycle by investing in innovation and updating our operating model to better serve our customers,” Fausing said.
Sustainability remains a key priority for Danfoss. The company is on track to decarbonise its global operations by 2030. In the first half of 2024, Danfoss secured a Power Purchase Agreement in China, which will significantly reduce emissions starting from 2025. The company has now secured agreements to decarbonise 60% of its operations in China.
Looking ahead, Danfoss has revised its sales forecast to the lower end of the €10.0-11.5 billion range for the full year. The EBITA margin is expected to be between 11.0-12.0%. The company’s future performance will depend on global supply chain stability, geopolitical factors, inflation, and overall growth rates.
Key figures for the first half of 2024 include a 9% decrease in sales to €5,012 million, a 22% drop in EBITA to €533 million, and a 28% decline in net profit to €291 million. Despite the current challenges, Danfoss remains focused on leveraging its innovation and strategic updates to drive future growth.
