Introduction to Danfoss

Danfoss engineers technologies that enable the world of tomorrow to do more with less. We meet the growing need for infrastructure, food supply, energy efficiency and climate-friendly solutions

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Trend World population is moving into cities, creating a huge demand for infrastructure 3 | Corporate presentation, March 2016

Danfoss We help build the infrastructure in a sustainable and efficient way

Infrastructure

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Trend World population is growing and there is a constant need for more and better food 5 | Corporate presentation, March 2016

Danfoss We help meet this need by improving farming productivity and keeping food cold and fresh

Food

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Trend Global energy demand is rising as population grows and standards of living increase 7 | Corporate presentation, March 2016

Danfoss We help get more out of less with our energy-efficient technologies

Energy

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Trend Global emissions are rising, however, development can be turned around and air pollution limited 9 | Corporate presentation, March 2016

Danfoss We help lower emissions and increase human well being through our innovative technologies

Climate

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Danfoss facts Employees Worldwide sales Factories Top three markets Ownership Headquarters

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23,400 more than 100 countries 61 in 20 countries USA, China and Germany Privately held Nordborg, Denmark

Key financials (2015) Net sales EBIT

(excluding other income and expenses)

Free cash flow

(before M&A)

38.0 bn DKK

5.1 bn EUR

4.2 bn DKK

568 m EUR

3.4 bn DKK

456 m EUR

Net sales

EBIT

bn DKK the last five years

bn DKK the last five years Gains from divestments

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Our global markets

Share of net sales per region 2015

North America 24%

Eastern Europe 9% Western Europe 39%

Latin America 5% Africa/Middle East 3%

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Asia-Pacific 20%

Our organization Executive Committee Kim Fausing

Niels B. Christiansen

Executive Vice President & COO

President & CEO

Global Services

Jesper V. Christensen Executive Vice President & CFO

Corporate Functions

Danfoss Power Solutions

Danfoss Cooling

Eric Alström

Jürgen Fischer Segment President

Segment President

Segment President

Hydrostatics

Refrigeration & Air Conditioning Controls

Power Electronics

Residential Heating

Vacon

District Energy

Segment President

Work Function Controls

Commercial Compressors Industry Business Heat Exchangers

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Danfoss Drives Vesa Laisi

Danfoss Heating Lars Tveen

Commercial Controls

Strategy journey – Core & Clear 2010Journey starts • Invest in core business areas and divest non-core activities • Optimize business and reduce complexity • Sharpen value for customers through stronger focus on quality, reliability and innovation • Motivate employees to support changes and perform their best

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2014/2015 Results

2016 Journey continues

• Record-high sales and profit

• Continue improving business

• Double-digit improvement in productivity per year

• Expand Danfoss’ global position and further accelerate profitable growth

• Best-in-class quality and on-time deliveries • Leading positions strengthened (number one or two) • High employee engagement at 76 measured in 2015 (scale: 1-100)

• Invest in innovation, branding and market growth pockets • Acquire new technologies and activities

Innovation that makes a difference • Heavy investment in innovation – 4.2% of net sales in 2015 • Customer involvement from start to finish • 50 product lines that meet needs and make a difference • On average, we are granted a new patent every day

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Committed employees • 23,400 employees dedicated to engineering solutions that make a difference to people and businesses worldwide • High employee engagement (2015: 76 on 1-100 scale)

Our behavior We build our business on trust and integrity 17 | Corporate presentation, March 2016

We are innovative in our ambition to exceed expectations

We are global and embrace diversity

We treasure sustainable results

Employees worldwide

North America

Eastern Europe

3,410 Western Europe

Latin America

9,540 Asia – Pacific

1, 200 Africa – Middle East

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3,910

195

5,170

Our approach to sustainability • Follow the UN Global Compact • Guidelines, training and programs that govern our behavior • Code of Conduct for suppliers and regular audits to verify compliance • Climate strategy: by 2030, Danfoss will be using half as much energy as in 2007 and this energy will emit half as much CO2

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Our history • Founded in 1933 by Mads Clausen in Nordborg, Denmark • Grown from a solo enterprise into a world-leader • Made possible by clear focus on innovative engineering and early entry on emerging markets Cooling

First product was an expansion valve for refrigeration systems (1933)

Heating

Danfoss invented one of the first radiator thermostats in the world (1943)

Power Solutions

Entered hydraulics business with orbit motor for agricultural and construction machines (1964)

Drives

First company to massproduce variable speed drives for controlling motors (1968)

Later the hermetic compressor for refrigerators and freezers followed (1952)

Today, we are one of the world’s leading producers of these and many other products

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