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First quarter in line with expectations

Company News Wednesday, May 10, 2017: Danfoss (Pty) Ltd

The Danfoss Group had a satisfactory start to 2015. Total net sales in the first quarter were DKK 9,385m against DKK 8,303m in the first quarter of 2014, corresponding to 13% growth including the additional sales coming from the Finnish drives manufacturer Vacon, which Danfoss acquired in the latter part of 2014. In local currency growth was 6%. Free cash flow before M&A continued to be strong, while the Group’s earnings (EBIT excluding other operating income/expenses) were DKK 930m against DKK 996m in the year-earlier period.

‘The first three months were in line with our expectations. As expected, the economic downturn in Russia and in particular the significant depreciation of the ruble in the latter part of 2014 led to some turbulence in the market, which has affected our heating business in the region. Taking that into consideration, all in all a good start to the year,’ says President & CEO Niels B. Christiansen.

Market conditions continued to be mixed across the regions, and overall global low growth characterized the first quarter.

‘During the beginning of the year, we have taken further steps to position our organization to accelerate profitable growth. We remain focused on utilizing and investing in opportunities for growth like in India, Turkey and Mexico, and the incipient optimism in North America and Europe is also good news for us,’ says Niels B. Christiansen.

From a business segment point of view, the strengthened Danfoss’ drives business following the acquisition of Vacon continued to show good momentum. Also, the cooling business performed well in the beginning of the year, among other thing due to the Groups targeted investments in the high growth potential in India.

Highlights of 1st quarter 2015 year-to-date:

• Net sales were DKK 9,385m against DKK 8,303m in the year-earlier period, equal to 13% growth and adjusted for currency impact was 6%.
• The operating profit (EBIT excluding other operating income/expenses) was DKK 930m against DKK 996m in the year-earlier period.
• Free cash flow before M&A was DKK 291m against DKK 228m last year, equal to an improvement of 28%.

Outlook for 2015
Net sales including full-year impact of the acquisition of Vacon is expected to grow by 5-10%.

Underlying profitability is expected to slightly improve. However, integration cost in the first year of Vacon ownership is expected to keep operating profit (EBIT) excluding other income and expenses on par with 2014.

For more information: Danfoss Media Relations, tel.: +45 7020 4488