Annual Report 2016: Danfoss delivers growth – massive investments in digitalization continue
Net sales increased 6%, paving the way for further innovation.
2016 proved yet another good year for Danfoss with top-line growth, healthy profitability, and significant investments in digitalization. At the same time, with the EU’s Winter Package, among other things, energy efficiency climbed the global climate change agenda, and this is expected to further increase the demand for Danfoss technologies.
“We are utilizing our robust financial position to create growth and seize the opportunities within digitalization. In 2016, we succeeded doing just that, and we grew faster than the market. Also, we increased our market share through the acquisition of two companies, Sondex and White Drive Products. At the same time, we significantly accelerated investments into new digital solutions,” says Niels B. Christiansen, President & CEO, Danfoss.
In 2016, net sales increased by DKK 1.2 to reach DKK 39.2 billion (EUR 5.3 billion), corresponding to growth of 6% in local currency. In particular, this improvement was achieved in Europe, Danfoss’ largest market. However, China and parts of North America also contributed to the positive trend. Sales in India also increased significantly throughout the year. Operating profit (EBIT) improved 4% to DKK 4.3 billion (EUR 572 million), while the net profit reached DKK 2.9 billion (EUR 394 million), an increase of 13% compared to 2015. Free cash flow before M&A was maintained at the same high level as in 2015. Danfoss Cooling, in particular, performed strongly with increased sales and earnings. Also Danfoss Power Solutions delivered good performance in 2016, while Danfoss Heating and Danfoss Drives were affected by challenging markets and low activity levels in several global industries, respectively; however, both segments delivered solid results considering the market conditions.
“We expect that the modest global growth will continue in 2017. However, we are in a strong position for operating within a framework, where energy-efficient technologies play a key role in fulfilling the COP21 climate deal from Paris. This is a long-term perspective, but investments are underway. For that reason, Danfoss must continue to grow above market average, and we will maintain the massive investments in innovation, benefitting our customers. We have long-term priorities and will continuously improve our market position through growth initiatives, digitalization, and acquisitions,” says Niels B. Christiansen.
Financial highlights from the Annual Report 2016:
- Net sales were DKK 39.2 billion (EUR 5.3 billion) against DKK 38.0 billion (EUR 5.1 billion) in 2015, corresponding to growth of 6% in local currency.
- Operating profit (EBIT) improved 4% to DKK 4.3 billion (EUR 572 million) against DKK 4.1 billion (EUR 549 million) the previous year.
- EBIT margin was 10.9% against 10.8% in 2015, following a higher investment level in digitalization and innovation.
- Free cash flow before M&A was maintained at the strong 2015 level, reaching DKK 3.4 billion (EUR 459 million).
Outlook for 2017:
We expect to maintain or expand our market share, while maintaining the profitability measured as margin at the 2016 level, following significant investments in digitalization.
Danfoss Media Relations: tel.: +45 70 20 44 88