Danfoss repeated the record results from 2011 and delivered an all-time high free cash flow from the underlying business in 2012. The reason was the company’s execution of the Core & Clear strategy combined with high growth rates in Russia and the US, which made up for the Chinese decline at the beginning of the year. Net sales amounted to DKK 34,007 m compared to DKK 33,904 m in 2011.
Throughout the year, sales were driven by strong demand for climate and energy solutions, with the Russian market in particular reporting solid growth of 24 per cent. Conversely, the Chinese market slowed down in the first half of the year due to the Chinese authorities’ deliberate efforts to decelerate the building and construction sector. Conditions in the Chinese market stabilized in the second half of the year. Brazil and India maintained last year’s performance, and all four BRIC markets remain among Danfoss’ 15 largest markets.
Niels B. Christiansen, President & CEO, says: “Danfoss delivers yet another strong performance in a difficult global market environment: we maintained our net sales, we delivered record cash flows, and we achieved growth in strategically important markets such as Russia while improving our profitability. This is our third consecutive year of strong results, and this demonstrates the efficacy of our strategy of investing and creating growth in emerging economies and new markets. With climate and energy solutions as our main driver, we aim to strengthen this position over the coming years. With prospects of the global uncertainty persisting in 2013, we must leverage our strong momentum to maintain growth, strengthen our earnings and increase our cash flows.”
In 2012, Danfoss invested DKK 1,324 m in product development compared to DKK 1,263 m in 2011. Investments as a percentage of net sales rose to 3.9 per cent against 3.7 per cent the year before. The company invested in strengthening its innovative capacity by extending its product development program as well as by launching a number of specific new products in 2012. During the year, it filed 152 new patent applications compared to 143 the year before, and 244 patents were granted to the group compared to 223 patents in 2011. At the end of 2012, the group thus had 2,101 patents against 1,784 the year before.
During the year, Danfoss introduced a new frequency converter specifically aimed at new growth markets, in particular India and China. The model combines core functionality with energy-efficiency, user-friendliness and reliability, featuring, for instance, special coating of the electronic components for increased robustness. The result is a product that is easy and quick to install and requires a minimum of maintenance.
The frequency converter, which helps control electric motors, is, for instance, used in the textile industry in the new Asian growth markets where increasing industrialization and automation offer considerable potential for energy savings.