Danfoss – H1 25, First impression
21.8.2025
Danfoss (MW) – H1 25 – Credit neutral
Key take-aways:
Taking the volatile market conditions into account, we believe Danfoss delivered a solid H1 25 despite organic revenue growth of -3% y/y and a 2% y/y decline in EBITDA before special items. We note that Danfoss has seen improved growth momentum through the first half of 2025 and that the guidance for 2025 is maintained. We see adjusted net debt to EBITDA before special items at 2.1x in H1 25 which is commensurate with the BBB/S and Baa1/S ratings from S&P and Moody’s respectively. For the Baa1/S rating Moody’s requires adjusted debt to EBITDA below 2.5x. Danfoss targets a capital structure that is compatible with a BBB credit rating over the cycle. Outstanding bonds are trading at Industrial BBB+ to Industrial A- levels reflecting the solid fundamentals of the company, a track record of low leverage and a prudent financial policy. We see the valuation of bonds as fair although we see the H1 25 report as a slight relief after a difficult 2024. Credit neutral.
H1 25 development, EUR (growth y/y)
- Revenue: 4,8bn (-4% y/y)
- EBITDA bef special items: 737m (-2% y/y)
- Reported net debt: 2.9bn (-13% y/y)
- Reported net debt to EBITDA: 2.2x (+0.2x y/y)
Outlook/further comments
In H1 25 Danfoss reported revenue growth of -5% y/y – driven by -3% y/y organic growth. China and to some extent North America showed positive signs with Europe as a weak spot. The EBITDA-margin before special items improved to 15.4% in H1 25 – up from 15.0% in H1 24. Operating cash flow was weak at EUR28m – down 79% y/y but we believe this is most likely due to increased working capital. For 2025 Danfoss guides for revenue of EUR 9.5-11.0bn (2024: EUR 9.7bn) and an operational EBITA margin of 10.8-12.3% (2024:11.3%). The outlook is based on current known tariffs. With significant production in the US we do not expect US tariffs to have a big direct impact
