The decline in demand is expected to persist throughout the year, prompting Danfoss to take adaptive measures in response to the current market conditions. Despite these challenges, the company continues to invest heavily in innovation to support its long-term growth strategy.
Resilient Performance: Despite the slowdown, Danfoss observed strong performance in its Climate Solutions, Drives, and most Electrification businesses, driven by trends in decarbonization, digitalization, and electrification.
Market Challenges: The lower demand was particularly pronounced in sectors such as agriculture, construction, and roadbuilding, impacting the Power Solutions segment. Additionally, the European construction market remains soft, particularly in Central Europe, affecting the heating business, including residential heat pumps and district heating. The automotive and EV markets in both Europe and the US also saw significant reductions in OEM production schedules for 2024 and 2025.
Regional Outlook: While the activity level in Europe and China remains subdued and is expected to continue, the US market shows signs of a slowdown, contrasting with continued growth momentum in India.
Updated Operating Model: To position Danfoss for future growth, the company is implementing an updated operating model aimed at enhancing innovation, improving performance, and fostering a more entrepreneurial mindset. This includes decentralizing decision-making to increase market and customer proximity, scalability, and efficiency.
Innovation Investment: Investments in research and development remained strong at EUR 247 million, representing 4.9% of sales. Danfoss continues to bring innovative solutions and technologies to the market, maintaining its commitment to long-term growth.
Danfoss remains committed to its sustainability goals, particularly the decarbonization of its global operations by 2030. In the first half of 2024, the company made significant strides, including signing a local Power Purchase Agreement (PPA) in China that will reduce its annual scope 1 and 2 emissions in China by 33% from 2025 onward, contributing to a 9% reduction globally.
Danfoss aims to expand or maintain its market share, although sales are now expected to be at the lower end of the EUR 10.0-11.5 billion range for the full year. The EBITA margin is forecasted to be between 11.0-12.0%, considering ongoing integration efforts and investments in new products. The company is also assessing strategic options to reduce its cost base, which may lead to further one-off costs.
Kim Fausing, President & CEO of Danfoss:
"While the current situation may be challenging, our focus remains on serving our customers and pursuing our long-term growth strategy. We are adapting to market conditions and continue to invest in innovation to secure Danfoss' future success."
Danfoss continues to navigate the economic cycle with a clear focus on innovation, sustainability, and long-term growth, positioning itself to emerge stronger from the current market challenges.