Danfoss A/S: First quarterly report 2009

”Danfoss has a strong belief that our operating profit is set to improve as we approach the end of the year; it is now possible to calculate the effects of the many initiatives that we have carried out to counter the global crisis. This does not change the fact that we, as expected, continue to be hit by the global recession and that the numerous restructuring activities and cost reductions will not be apparent until the second half-year and in 2010. Therefore, the first quarter generated a negative result, which is entirely in line with our expectations. We also expect a negative and weak second quarter, since we do not anticipate the overall market conditions to improve in the course of 2009. So the possibility remains for further initiatives to introduce additional restructurings, if the situation worsens. Net sales have reached a comparatively stable level, so the effect of the restructuring activities will mean that we will obtain improved profit in the second half-year. However, this will not compensate for the expected negative first half-year, which is why our expectations of a loss for 2009 is maintained.”

Niels B. Christiansen, President and CEO, Danfoss A/S
Highlights from the first quarter of 2009:
The comparison figures are affected by the fact that Sauer-Danfoss is not included in the 2008 figures for the first half-year, whereas Sauer-Danfoss is fully consolidated from July 1, 2008.
- Net sales were 6.5bn DKK, which equals growth of 20%. When adjusted for acquisitions, divestments and foreign currency translations, growth fell by 16%, compared to growth of 2% in the same period the year before.
- The profit before other income and expenses was a deficit of 379m DKK, whereas the operating profit (EBIT) showed a loss of 447m DKK.
- The profit before tax was a deficit of 562m DKK, and the profit after tax was a loss of 398m DKK.

Expectations for 2009:

Danfoss maintains its expectations for both the net sales and profit for 2009, as announced in the 2008 Annual Report.
- In spite of Sauer-Danfoss’ effect on the entire year, net sales are expected to fall slightly compared with 2008.
- In total, following the recognition of Sauer-Danfoss, Danfoss expects to end 2009 with a negative result.