Danfoss First Half 2025 Interim Announcement
Date of publication: August 21, 2025
Website: www.danfoss.com
Highlights from the First Six Months of 2025
Danfoss engineers solutions that increase machine productivity, reduce emissions, lower energy consumption, and enable electrification. Our solutions are used in areas such as refrigeration, air conditioning, heating, power conversion, motor control, industrial machinery, marine, and on- and off-highway equipment. Danfoss also provides solutions for renewable energy, including solar and wind power, storage, and heat recovery, and contributes to district energy solutions for cities. The company continues to invest in innovation across its three business segments to improve product and solution performance and offer competitive solutions to customers, engineering a better future and enabling customer success.
Key Financial Metrics (First Half 2025 vs. First Half 2024):
- Sales: EUR 4.8 billion (H1 2024: EUR 5.0 billion), with -3% organic growth.
- Operational EBITA: 10.6% of sales (H1 2024: 11.5%), amounting to EUR 509 million (H1 2024: EUR 576 million).
- Innovation (R&D Investments): EUR 266 million (H1 2024: EUR 247 million), representing 5.6% of sales (H1 2024: 4.9%).
- Investments excluding M&A: EUR 220 million (H1 2024: EUR 162 million), representing 3.4% of sales (H1 2024: 3.4%).
- Cash Flow: EUR -167 million (H1 2024: EUR -118 million).
Sales Split by Segments:
- Danfoss Power Solutions: 43%
- Danfoss Climate Solutions: 32%
- Danfoss Power Electronics and Drives: 25%
Sales Split by Regions:
- Europe: 41%
- Americas: 37%
- Asia Pacific: 22%
Financial Highlights
| Profit and Loss Account (EURm) | H1 2024 | H1 2025 | Change in % |
|---|---|---|---|
| Net sales | 5,012 | 4,788 | -4% |
| EBITDA before OOI/E | 754 | 737 | -2% |
| EBITDA | 750 | 744 | -1% |
| Operational EBITA | 576 | 509 | -12% |
| EBITA | 533 | 516 | -3% |
| EBIT | 478 | 448 | -6% |
| Financial items, net | -79 | -69 | -13% |
| Profit before tax | 399 | 380 | -5% |
| Net profit | 291 | 269 | -8% |
| Cash Flow Statement (EURm) | H1 2024 | H1 2025 | Change in % |
|---|---|---|---|
| Cash flow from operating activities | 131 | 28 | -79% |
| Cash flow from investing activities | -223 | -163 | -27% |
| Acquisition of/Proceeds from disposal of property, plant and equipment | -202 | -150 | -26% |
| Cash flow from financing activities | -149 | -85 | 43% |
| Financial Key Figures | H1 2024 | H1 2025 | Change in % |
|---|---|---|---|
| Free operating cash flow | 136 | -13 | -110% |
| Free operating cash flow after financial items and tax | -118 | -167 | -42% |
| Free cash flow | -131 | -175 | -34% |
| Financial Ratios | H1 2024 | H1 2025 | Change in % |
|---|---|---|---|
| Organic growth (%) | -9 | -3 | 6 |
| EBITDA before OOI/E margin (%) | 15.0 | 15.4 | 0.4 |
| EBITDA margin (%) | 15.0 | 15.5 | 0.5 |
| Operational EBITA margin (%) | 11.5 | 10.6 | -0.9 |
| EBITA margin (%) | 10.6 | 10.8 | 0.2 |
| EBIT margin (%) | 9.5 | 9.4 | -0.1 |
| Equity ratio (%) | 46.0 | 48.4 | 2.4 |
| Leverage ratio (%) | 60.6 | 53.0 | -7.6 |
| Net interest-bearing debt to EBITDA ratio | 2.0 | 2.2 | 0.2 |
| Balance Sheet (EURm) | H1 2024 | H1 2025 | Change in % |
|---|---|---|---|
| Total non-current assets | 8,006 | 7,597 | -5% |
| Total assets | 11,949 | 11,293 | -5% |
| Total shareholders' equity | 5,500 | 5,469 | -1% |
| Net interest-bearing debt | 3,331 | 2,899 | -13% |
Key figures and financial ratios are calculated as defined in Note 27 in the Annual Report for 2024.
Robust Results Despite Volatile Environment
Danfoss demonstrated robust performance across its three business segments in the first half of 2025, despite a volatile environment. This was driven by the progression of inventory corrections in its markets and disciplined execution. Order intake and sales continuously improved throughout the first half year, with slightly positive sales growth in the second quarter. The operational EBITA margin continued to improve, reaching 11.5% in the second quarter, in line with expectations. The company achieved an operational EBITA margin of 10.6% in the first half. Cash flow is slightly below the previous year, but Danfoss expects to deliver the full year in line with its plans. The company launched its new strategy, LEAP 2030, following the implementation of its new operating model. Approximately two-thirds of the electricity purchased globally is now green. Danfoss confirms its guidance for the year.
Business Update
Improved growth momentum was observed across the first six months, with the majority of divisions showing positive growth by the end of the second quarter. Danfoss experienced strong and resilient performance, particularly in its Climate Solutions and Drives businesses. Significant differences in market dynamics persist across the various markets in which Danfoss operates.
Danfoss Climate Solutions delivered a strong first half with high, single-digit growth, driven by momentum in data centers and the ongoing refrigerant transition.
Danfoss Power Electronics and Drives saw soft sales due to a challenged European automotive market, but order intake improved. The segment performed strongly in low-voltage drives, particularly for data centers, HVAC, and water and wastewater applications. Danfoss Power Solutions was negatively impacted by the downturn in the mobile hydraulics market, primarily due to lower demand in U.S. agriculture and construction markets. However, this business returned to growth by the end of the second quarter, mainly driven by data center solutions.
Despite a large degree of localized production, Danfoss is impacted by tariffs and is working with customers and partners to mitigate the impact.
Sales
Group sales reached EUR 4,788 million (H1 2024: EUR 5,012 million) with a negative organic growth of -3%. China delivered high, single-digit growth, and the North American market returned to growth during the second quarter. Signs of recovery in Europe are less pronounced.
Earnings
Danfoss maintained its focus on disciplined execution and operational excellence, delivering an operational EBITA margin of 10.6% (H1 2024: 11.5%). The operational EBITA margin continued to improve in the first half, reaching 11.5% in the second quarter, in line with expectations.
Innovation
Investments in R&D increased to EUR 266 million (H1 2024: EUR 247 million), corresponding to 5.6% of sales (H1 2024: 4.9%), driving innovation and technology leadership.
Balance Sheet
As of June 30, 2025, total assets were EUR 11,293 million (H1 2024: EUR 11,949 million). Equity was EUR 5,469 million (H1 2024: EUR 5,500 million). The equity ratio reached 48.4% (H1 2024: 46.0%). Net interest-bearing debt amounted to EUR 2,899 million (H1 2024: EUR 3,331 million), leading to a net interest-bearing debt to EBITDA ratio of 2.2 (H1 2024: 2.0).
In June 2025, Danfoss' credit rating assigned by S&P Global was "BBB with a stable outlook". Moody's Ratings assigned Danfoss a rating of "Baa1 with a stable outlook". This reflects Danfoss' strong track record of stable and high profitability, underpinned by a conservative financial policy and diversified revenue exposure.
Cash Flow
The free operating cash flow after financial items and tax (before M&A) amounted to EUR -167 million (H1 2024: EUR -118 million). Cash flow is slightly below last year, but Danfoss expects to deliver the full year in line with its plans. The free operating cash flow was EUR -13 million (H1 2024: EUR 136 million), driven by an increase in net working capital due to higher activity in Q2. Cash flow from investing activities amounted to EUR -163 million (H1 2024: EUR -223 million), primarily relating to investments in machinery, equipment, and digital transformation.
Our New Transformative Growth Strategy
Following the implementation of its new operating model, Danfoss launched its new strategy, LEAP 2030, marking the next era of growth and value creation. With its broad portfolio, Danfoss is positioned as a leading partner for competitive, innovative, and sustainable solutions, unlocking significant opportunities.
Danfoss continues to make significant investments in strategic growth markets, innovative technologies, and a strong, agile regional manufacturing footprint to deliver value to its customers.
Focused Investments in Strategic Growth Markets: In line with the LEAP 2030 strategy, Danfoss is strengthening its global positions and investing in key markets like India and attractive high-growth markets such as data centers. Data centers represent a major opportunity, with Danfoss offering innovative and sustainable technology for both air- and liquid-cooled data centers, including power conversion and energy storage.
Danfoss works closely with hyperscalers and chip manufacturers to provide energy-efficient and sustainable solutions, strengthening partnerships through participation in organizations like the pan-European Net Zero Innovation Hub for Data Centers.
Delivering Competitive, Innovative, and Sustainable Solutions: Investment in R&D, which increased to 5.6% of sales in the first six months, is a key element of the LEAP 2030 strategy. Danfoss Climate Solutions has expanded its compressor offering, enhancing performance, energy efficiency, and capacity with technologies including oil-free Turbocor®, scroll, and BOCK® semi-hermetic compressors. Danfoss Power Electronics and Drives has strengthened its intelligent power conversion offering with the iC7 Hybrid and iC7 Marine product ranges. Danfoss Power Solutions launched its new platform of open-circuit piston pumps, X1P, offering unmatched performance, reliability, and flexibility in a compact design for applications like skid steer loaders, compact track loaders, mini excavators, and telehandlers.
Regionalization of Manufacturing: A strategic priority is the regionalization of the manufacturing footprint to better support customers and drive resilience. This year, Danfoss is completing a new manufacturing facility for compressors and sensors in Mexico, strengthening its China-for-China setup with a new campus for mobile hydraulics and Turbocor® oil-free compressors, and investing to increase capacity across its more than 30 U.S. production sites.
Continued Progress in Sustainability
Sustainability is a core business driver, enhancing competitiveness. In the first half of 2025, Danfoss continued to reduce its own emissions. All Danfoss facilities in North America are now powered with renewable energy from a Texas solar farm through a new power purchase agreement, covering 185,000 MWh annually through 2032. This agreement reduces the North American carbon footprint by 75% and the global carbon footprint by 21%. Consequently, approximately two-thirds of the electricity purchased globally by Danfoss is now green.
Danfoss remains committed to ensuring fair and non-discriminatory people policies, processes, and initiatives. In the first half of the year, 77% of global management teams were diverse in terms of gender and nationality (up from 69% in H1 2024). The share of women in leadership positions reached 24.2%. As of June 30, 2025, Danfoss had 39,367 employees.
Events After the Balance Sheet Date
Danfoss is not aware of any events after the balance sheet date of June 30, 2025, that could be expected to have a material impact on the Group's financial position.
Outlook for the Year
Danfoss aims to expand or maintain its market share. Sales are expected to be in the range of EUR 9.5-11.0 billion for the full year. The operational EBITA margin is expected to be in the range of 10.8-12.3%, reflecting continued investments in new products and solutions. The outlook is based on current known tariffs and is dependent on global supply chain stability, the geopolitical environment, inflation, exchange rates, and general global growth rates.
As a technology leader in the green transition, Danfoss has significant potential to drive competitive decarbonization with its customers. Danfoss remains committed to decarbonizing its global operations by 2030 through initiatives on Decarbonization, Circularity, and Inclusion. The company will continue to invest in sustainability, improve its climate footprint, and deliver on its sustainability ambition.
Forward-Looking Statements
This interim announcement includes forward-looking statements subject to risks and uncertainties outside of Danfoss' control. Various factors could cause actual developments and results to differ from expectations. Reference is made to the forward-looking statements in the Annual Report 2024. Danfoss does not assume any obligation to update these statements.
Segment Performance Details
Danfoss Power Solutions
Danfoss Power Solutions continued to be negatively impacted by the downturn in the mobile hydraulics market, with sales reaching EUR 2,086 million (H1 2024: EUR 2,235 million) and an organic growth of -6%. This was driven primarily by lower demand in the U.S. agriculture and construction markets. However, the business returned to growth by the end of the second quarter, mainly driven by solutions for data centers. Danfoss Power Solutions launched its new platform of open-circuit piston pumps, X1P, delivering unmatched performance, reliability, and flexibility in a compact design. The operational EBITA margin reached 11.0% (H1 2024: 11.6%).
Danfoss Power Solutions delivers full solutions capabilities in mobile and industrial hydraulics, fluid conveyance, electrification, and software.
Danfoss Climate Solutions
Danfoss Climate Solutions delivered a strong first half with sales reaching EUR 1,587 million (H1 2024: EUR 1,492 million) and a positive organic growth of 7%. This was driven by strong momentum in data centers and the ongoing refrigerant transition. Danfoss Climate Solutions has invested in expanding its compressor offering, enhancing performance, energy efficiency, and capacity across key compressor technologies, including oil-free Turbocor®, scroll, and BOCK® semi-hermetic compressors. The operational EBITA margin reached 15.8% (H1 2024: 14.3%).
Danfoss Climate Solutions delivers energy-efficient heating and cooling solutions for industrial applications, buildings, infrastructure, and the entire food and cold chain.
Danfoss Power Electronics and Drives
Danfoss Power Electronics and Drives saw sales reaching EUR 1,105 million (H1 2024: EUR 1,259 million) and an organic growth of -12%. The segment experienced soft sales due to inventory workdowns and a challenged European automotive market, though order intake improved. It delivered strong performance in low-voltage drives, particularly for data centers, HVAC, and water and wastewater applications. Danfoss Power Electronics and Drives has strengthened its intelligent power conversion offering with the iC7 Hybrid and iC7 Marine product ranges. The operational EBITA margin reached 6.6% (H1 2024: 10.5%).
Danfoss Power Electronics and Drives delivers clean-energy solutions including AC drives, power semiconductor modules, and electrification in the automotive and various industries.
Contact Information
Danfoss A/S
Nordborgvej 81
6430 Nordborg
Denmark
Tel.: +45 7488 2222
CVR no. 20165715
Email: danfoss@danfoss.com
Cover Photo Description
As artificial intelligence drives rapid data center growth, Danfoss supports cloud providers and chipmakers with energy-efficient, water-saving, and cost-effective cooling solutions that ensure reliable operations. Photo courtesy of ThermalWorks Advanced Waterless Cooling.
