International. An 18% growth in local currency reported Danfoss in the results report corresponding to the first half of 2021, increasing sales to 3.3 billion euros.
During this year, the company continued with significant investments in innovation and development (R&D), which amounted to 4.7% of sales. At the same time, Danfoss generated a 45% increase in operating profit with an EBITA of €449 million, an operating profit that even exceeded the solid level of the first half of 2019, before COVID. Net profit increased by 74% to €286 million.
"I am very proud to present the best half-year results in history. We report record revenue, profitability and cash flow. At a time when the effects of climate change are increasing, according to the recently released IPCC climate change report, Danfoss is taking the lead in transforming towards a carbon-neutral future. Our unmatched R&D capabilities and out-of-the-box electrification and low-power solutions are enabling the green transition," said Kim Fausing, President and CEO of Danfoss.
"With these strong results, we are ready for the second half of the year. It is exciting to close the acquisition of Eaton Hydraulics and welcome our 10,000 new colleagues. We have just started our journey together: two talented and highly competent teams joining forces to become an even stronger technology manufacturer and offer the best solutions to our customers and distributors," says Fausing.
The president of Danfoss also commented that like other companies around the world, Danfoss has seen challenges in its supply chain due to delays in logistics, shortages of electronic components and price increases in freight and raw materials. "In all of our businesses, we continue to do everything we can to serve our customers and ensure minimal impact. At the same time, I want to thank all of Danfoss' colleagues for the excellent teamwork and resilience they demonstrate in facing the challenges of the pandemic. I am very proud of how we continue to consider health and safety to protect our people, communities and customers, while ensuring our growth strategy."
Key figures in the first half of 2021
• Sales increased by 14% to €3,265 million (H1 2020: €2,864 million), corresponding to an 18% growth in local currency.
• Operating profit before acquisition-related amortization (EBITA) increased by 45% to €449 million (first half of 2020: €309 million). The EBITA margin increased to 13.8% (first half of 2020: 10.8%).
• Net profit was €286 million (first half of 2020: €164 million), 74% better than in the first half of last year.
• Cash flow from operating activities prior to mergers and acquisitions increased to €63 million (first half of 2020: €33 million).
• Investments in innovation (R&D) reached a high level of 154 million euros (first half of 2020: 130 million), which corresponds to 4.7% of sales (first half of 2020: 4.6%).
Outlook 2021
Danfoss, excluding Eaton Hydraulics, expects to maintain its market share, while improving profitability measured as margin versus the 2020 level, following continued investments in the development of new products and solutions.
Considering the anticipated additional sales of Eaton Hydraulics following the closing of the acquisition, Danfoss expects a significant increase in Group sales for the year 2021. It expects profitability to be affected by the allocation of the purchase price, depreciation and amortization, and integration costs related to the merger with Eaton Hydraulics. The acquisition was financed with debt and will result in increased financial expenses.
