http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/RSS.ashxDanfoss Group Global PagesMon, 02 May 2011 15:33:04 +0200http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=1http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=1MAKING MODERN LIVING POSSIBLE Green wave in China • Celebrations worldwide • Work & leisure time in Schleswig • Appliance Controls turns 60 • IT: Users want proximity • Leaders take to the floor 2/2011 | A Stakeholder Publication | English edition2011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=2http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=227 Published by Danfoss A/S Total number printed: 21,550 Address: Danfoss A/S, D11 DK-6430 Nordborg globaldanfoss@danfoss.com Responsible: Ole Daugbjerg Editor: Niels Chr. Larsen Prepress: Christa Hartmann Photographers: Glenn Simonsen and Rasmus Erslev Holt Print: Laursen Grafisk A/S 4 14 Published in Danish, English, French, Spanish, Polish, Slovenian, German, Chinese and Russian. Printed with vegetable colors on environmentally approved paper. Reproduction only by permission of the Editor and always with acknowledgement to Global Danfoss Global Danfoss April 2011 20 4 ChinA. Right up our alley 10 50 PERCEnT ADvAnCE on ThE hEATinG fRonT. Who has ever heard about Shenyang? 12 CuRTAin PullED bACk on GREEn fuTuRE. Chinese trial city and Danfoss enter agreement. 14 CElEbRATionS. Danfoss celebrating worldwide. 18 6111. Danfoss IT meant for everyone to be put through to China. 22 WoRk & lEiSuRE TimE in SChlESWiG. Meet a colleague in Germany. 24 lEADERS TAkE To ThE flooR. Executives to get familiar with DBS tools. 26 ThE PAST in CloSE-uP. Appliance Controls’ anniversary. 27 AnnuAl REPoRT. The Danfoss 2010 result. 22011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=3http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=3Leader Target reached – but new ones are waiting By President and CEO Niels B. Christiansen Take a look at the many lovely photos on pages 14 to 17 in this edition: Danfoss colleagues celebrating the good 2010 result - each country in its own fashion. Some decided to ski, others had a barbecue in the sun or performed a play for each other. Everywhere, they had a festive, colorful and imaginative event. When we celebrated, we knew that last year’s result was good, but we did not know that, following the poorest year in 2009, we had delivered the best-ever result in the history of Danfoss. Or that 2010 would be the year when we reached an EBIT of 10 which we have aspired to reach for many years: i.e. that we make 10 DKK for every 100DKK we sell. This has required a huge effort on the part of everyone, and I thank you for this. Sauer-Danfoss turned a disastrous year to an impressive 15 percent EBIT margin last year. Climate & Energy increased sales by 25 percent. Overall, our results have been driven forward by three main factors: our Core & Clear strategy, solutions for Climate & Energy and a very high growth in the BRIC countries. The impressive sales growth in Brazil, Russia, India and China has made a great impact. Altogether, the turnover grew by 50% in BRIC in 2010. These four countries now make up one fifth of Danfoss’ total net sales. Just four years ago, in 2006, the same figure was only 13%. This magazine focuses on China which in just a few years has become the third-largest market. We are especially successful in terms of components and solutions for refrigeration and freezing in the retail sector, components for air conditioning, frequency converters and district heating solutions. These are areas where we offer energy efficiency, and the interesting point about this is that increasingly, the demand is driven by the fact that Chinese law is now encouraging the need for energy-efficient solutions. On the following pages, you will discover that a supermarket chain has selected Danfoss to help it meet the requirement for a 15 percent reduction in its electricity bill. We will have many more such stories in the years to come, if China – and other countries – are to reach their targets. And that is what makes us so well prepared – as leaders within Climate & Energy. Europe, Asia, America, Africa, Oceania – no matter which continent – we are in a strong position with Core & Clear. However, in order for us to be successful, we need to constantly come up with new innovative and energyefficient products and solutions, and we must have a thorough appreciation of the customers’ needs and launch new products onto the market quickly. ” When we celebrated, we knew that last year’s result was good, but . 32011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=4http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=4Green China how China became the second home market There are many versions of the anecdote. This is the correct one: In 2004, then CEO Jørgen Mads Clausen, together with his wife Anette, realized a boyhood dream of driving a fourwheel drive car along one of the old silk routes to China. They drove through desolate areas, but noticed the differences in development levels, when they drove into China. When they arrived at Ürümqi, the capital of Xinjiang, there were department stores and five-star hotels, unmatched by the capital of Denmark. ”When I returned home, I discussed the fact that we were not active enough in China with the then Chairman of the Board, Birger Riisager.” A report prepared by the consultancy McKinsey recommended launching a ”Supergrowth” program in the country. Instead, it became ”Making China Our Second Home Market” China’s share of net sales 12% 10% 8% 6% 4% 2% 0% 2005 2006 2007 2008 2009 2010 The Pudong skyline is a dominant feature in Shanghai. Twenty years ago, there were rice fields on the other side of the river. 42011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=5http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=5China – right up our alley A few years ago, the singer Katie Melua became known for her song about nine million bicycles in Beijing. This might have been true then… but not anymore. Today, the citizens get around by car. Good for them; bad for the environment. But, despite the many new cars filling the roads, the city has still managed to improve the air quality. Significant reasons for this include: prohibition against the burning of coal, busses powered by natural gas, car traffic restrictions, several kilometers of metro and the shutting down of steel works in the area. The example provided by Beijing gives a picture of the general situation in China. On the one hand, the development is forging ahead in a country that needs to improve the standards of living, particularly in the countryside and the central and western provinces. On the other hand, there is a growing urgent need for the Chinese to show consideration for the environment and energy resources. This should be right up Danfoss’ alley considering our expertise in energy-friendly products and solutions. And developments have turned precisely in this direction. The major targets in China are Food Chain and District Heating, but the Chinese are also demanding drives – yes, all of the divisions have good sales rates in the country. Join the tour of China on the following pages. Text and photos by Niels Chr. Larsen. 52011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=6http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=6Harr y C hen Danfoss is in a good position as a supplier of refrigeration solutions for the biggest supermarkets in china but major improvement plans for the entire refrigeration chain are really set to open up new opportunities. Keeping cool in china 62011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=7http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=7Green China A visit to a supermarket is actually a very revealing insight into how China is progressing. We are visiting a Carrefour ’hypermarket’ in Shanghai – a big one of more than 10,000m², where the rapidly growing Chinese middle class can fulfill their desire to buy the consumer goods which come with modern living. Pushing very large shopping carts, they select goods from meter-long shelves. Here, you will find mini-bicycles, clothes, green tea, Chinese red wine called, for example, ’The Great Wall’, basins with live fish, and an area with Danfoss controlled freezing and refrigeration counters. And this is where we meet up with Harry Chen, who is responsible for the chain’s mechanical and electrical equipment. All of the solutions, which Carrefour in China is working to introduce, are standard systems in Europe and the USA, but this is far from being the case in China, explains Zhang Anning, Sales Director of Food Chain in China. The way he sees it, the energy-saving requirement has been an important factor for Danfoss, but it’s the increased focus on the entire refrigeration chain that he expects the most from. The focus is on improved food safety and less food waste as a result of better storage conditions. large food quantities are wasted While the refrigeration chain in the Western world now covers all foods, by far the majority in China are still not cooled during transport – despite the progress that has already been achieved. This results in large losses: 12 percent of the meat perishes, the same goes for 15 percent of fish and shellfish, and the annual loss of fruit and vegetables amount to an astronomical approx. 109m EUR. The government’s response to this is a sharpened focus on the whole of the refrigeration chain: for example, the number of cooling storage trucks will be doubled along with the cooling storage capacity. ”Once the plan is introduced, we think there will increasingly be a growing focus on saving energy,” says Zhang Anning, who expects growth to increase by 20-30 percent annually. facts Being a supplier to Carrefour, Danfoss has a dominant market share, and the chain is a key customer. There are a total of 1,000 hypermarkets in China – twice the number in Spain – of which 182 are Carrefour, and the French chain will this year alone open an additional 25. However, Danfoss does not have such a strong position on the Chinese mid-end market, but is currently trying to energyoptimize Lianhua, a governmentowned supermarket chain. He explains that, just like other retailers, Carrefour was directed in 2006 to save 15 percent on the power bill in line with the objectives of China’s 11th five-year plan. Since then, the supermarket chain has partnered up with Danfoss. The 15 percent target was already reached in 2008 using a locally adapted ADAP-KOOL system which was paid back in less than two years. Subsequently, a 20 percent reduction has been made, and Harry Chen is prepared to cut more from the power bill. focus on the entire cold chain A more advanced refrigeration system from Danfoss is currently being tested in five selected businesses, in competition with Honeywell and Emerson. Later, electronic expansion valves might follow. ”Danfoss is a well-known supplier of energy-efficient products, and I hope that Danfoss will come up with more ideas for saving energy,” he says. 72011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=8http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=8Green China Seen from the think tank We meet with Professor Li Junfeng, Deputy Director General of Energy Research Institute (ERI) and participant at both Cop15 and 16, at one of Beijing’s luxury hotels. Impressive surroundings: 20-30 meter glass partitions frame the lounge. ERI is a leading advisory body for China’s energy policy, the think tank under National Development and Reform Commission (NDRC), which is the national agency responsible for macro-economic management for the Chinese central government. How does the central government motivate power plants and the large coal-consuming industries to save energy? ”The companies can obtain a bonus for energy efficiency. The total budget last year amounted to 11bn Euros; 90 percent was paid. During the five years from 2006 to 2010, a total of 27.5bn Euros was paid. Things were slow to begin with.” That was the carrot. What’s the stick? ”It’s closing those down that do not fulfill the rules. Up to a thousand small power plants have been shut down, with total capacity of 71 gigawatts, during the 11th five-year plan. Steel works with a 100 million ton capacity have been replaced by more efficient ones.” How do you estimate the effect of this? ”Energy is a major issue in China, but the most important is air and water pollution as well as food safety. It is clearly necessary to lower the development of the gross national product to the advantage of the environment, and the large cities, Shanghai, Beijing and Guangzhou, have already cut their growth targets to improve the environment. The air quality in Beijing has improved significantly, and if Beijing can manage, so can other cities too.” Air conditioning is one of the major electricity guzzlers in China. We are sitting in a lobby which must be extremely expensive to aircondition. Which measures have been taken to lower the energy consumption in this building? ”Correct, very big shopping malls are being built and hotels with large, open areas. It is not likely that you will see a lounge like this in Europe. But it’s very hard to control the building activities.” facts • According to the 12th five-year plan adopted in March, China will cut CO2 emissions by 17 percent per unit GNP by 2015. • In 2015, 11.4 percent of energy consumption is planned to originate from non-fossil energy sources (in 2010 it was 8.3 percent) • The energy consumption per unit GNP must be limited by 16 percent. 82011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=9http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=9Tiger leap of new economic dynasty net sales at Danfoss in china have increased fourfold in just five years. growth is driven by a major need for energy. Niels-Erik Olsen, the Vice President Finance in China for almost five years, knows his figures. At the end of 2005 – the year he joined – Danfoss had net sales of 133m Euros. This had increased to … ”one moment, please” … 532m Euros by the end of last year, he reads on his computer screen in his office in Beijing. In that same period, the number of employees has increased from 1,200 to 3,200. ”This makes China the third-largest market for Danfoss – and the largest, if we exclude Sauer-Danfoss,” he points out. 1,400 kilometers away, in Shanghai, Michael Chang is currently a Director at Business Services in charge of the new central warehouse outside the city. He reveals that goods at the warehouse increased by 100 percent during 2009 and 2010. This means that the warehouse will soon have reached capacity and there will be a need for an extra building. Michael has been a part of Danfoss China almost from the beginning. He has held different positions right from the very first beginnings in the 90s up until today, when China is on its way to becoming the world’s greatest economy. ”70 million Chinese queued for hours in the baking sun to get inside the Shanghai Expo, where they could see the entire world under the theme ’better city – better living’. Since then, we have witnessed a green wave. Living standards have improved substantially over the past few years, and we now have a middle class who want to upgrade their way of life with, for example, floor heating and air conditioning – and are willing to pay for it. This also points in Danfoss’ direction,” he says. First and foremost, it is the energy-efficient products and solutions which drive Danfoss’ major growth on the Chinese market, and that’s the path that China has to follow. Electricity is scarce and new power plants are expensive. The overall goal of the previous five-year plan was to cut energy consumption by 20 percent, measured in terms of gross national product. It went well for the first few years, but the Chinese stimulus package pumped extra large amounts of Remembi into major projects within the railway and construction sectors etc. This ruined the equation. Power consumption skyrocketed, which led to blackouts at many power plants last year – the only option they had to reach the target was to shut down the plant. impacting legislation The requirement for reduced energy consumption has been followed up by a range of statutory initiatives, directives and subsidy schemes – such as the standard for the use of radiator thermostats; an area in which Danfoss has had a say in the legislation. The background to this is that already in the 90s, Danfoss was involved in a test in the major city of Tianjin, which is located close to where Danfoss has its biggest factories in China. At the time, thermostats were unknown territory, the consumers paid according to the apartment’s square meterage and opened the windows, if it became too hot inside. Now, a national standard has been adopted, says Ai Jyanchuan, Business Director at Danfoss Heating Solutions. Since last year, all new buildings supplied with district heating must have a form of heat metering device installed and the consumers must, in principle, pay for what they consume. And every building constructed after 2006 must comply with a 65 percent standard, which means they must save 65 percent energy compared with consumption in 1988. Beijing intends to squeeze this to 75 percent. “But you should know that China is a very large country and it will take time to implement the central regulations,” says Ai Jyanchuan. 92011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=10http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=10facts • Mao decided that only the areas north of the Yangtse river should be provided with district heating, but it gets bitterly cold during winter to the south too, so André Hansen predicts a major business area, when residents in their new and expensive apartments south of the Yangtse begin to demand a more reliable and comfortable heat supply. Chief Engineer Lu from the district heating company. Meng Gang, Vice General Manager of Huang Gu District Heating Co. 102011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=11http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=11Green China A 50 percent advance on the heating front Who outside china has ever heard about Shenyang? Well, it’s yet another big city of four to five million inhabitants and an insatiable need for housing construction – and heating. Here, we meet up with Mr Meng Gang, the Vice General Manager of Huang Gu District Heating Co., one of five large power plants in the city. One of his responsibilities is supplying heat to an increasing number of people – the Shenyang skyline is, like other great cities in China, dominated by construction cranes. And it’s cold up here, north of North Korea, so a lot of coal needs to be burned in the company’s power plants to keep the citizens warm. His other responsibility is to fulfill the government target of saving energy and limiting pollution, so that the city dwellers can see the sun. In particular, the air quality is highly prioritized. Shenyang has very heavy industry, a lot of machine factories, and this is where the BMWs and the Chinese luxury car, the Zhonghua, are produced. Many people wear white face masks, when walking or cycling around the city. However, we visit the city on a cold day with clear blue skies, and the smoke is blown in the other direction when it emerges from the power plant’s chimney. Good time to strike a deal It is in cities like Shenyang that Danfoss District Energy has enjoyed much success over the past few years; here as in around 50 other cities with a total population of more than 400 million people. André Hansen is Business Development Manager, and he reports that last year’s sales amounted to 16.5m Euros; a figure which is expected to increase to 25.3m Euros this year. The number of sales staff has to be increased by 30 percent to sell solutions based on district heating stations, ball valves, balancing valves – and when that succeeds, it will also lead to some frequency converter sales. ”The power plants didn’t used to take any particular interest in saving energy, but we have noticed that the mayors are very absorbed by this and the central regulations are pointing in our direction. We have a window of opportunity right now. We must make the most of it,” says André Hansen. The general rule is that air quality is the main argument, when the city is the customer. When it’s the power plant, the main issue is reliable supplies. The plant must deliver proof that the mayor and the remaining local government members can keep the citizens warm, points out Zhao Na, who is a Sales Engineer at the Danfoss office in Shenyang. Tripling in ten years It is precisely the issue of reliable supplies that is highest on Mr Meng Gang’s agenda. But, he ensures that energy efficiency is highly prioritized too: according to him, the biggest improvements should be based on improved construction quality, meaning better insulation, better windows – all areas on which the power plant has no influence – but he also sees an opportunity for the power plant being optimized to ensure more efficient production and distribution of heat, and his Chief Engineer, Lu, predicts the close cooperation with Danfoss to continue. ”Suppliers differ a lot. Danfoss is renowned for good quality and good service,” he says. Currently, Huang Gu District Heating Co. supplies heat to 10 million residential square meters, which equals 100,000 apartments. They are all located to the north of the city, the part where development is accelerating most. According to the scheduled activities, the company is set to supply a total of 300,000 apartments within ten years; a three-fold increase. A single Danfoss substation provides district heating to 1,000 apartments and this year alone, the company will buy 11 more of them. facts • Huang Gu District Heating Co. burns 550,000 tons of coal annually. The company will build an extra two power plants over the next ten years. • From 2005 to 2006, 199 old-fashioned coal burners were shut down in the company’s district, and the district heating network was expanded. This has in2011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=12http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=12Green China facts According to Baoding’s communal construction office, the following has been constructed in recent years: • 10,000 apartments supplied with heat via solar collectors or heat pumps used for hot water. • 60,000 apartments consuming energy equal to half or more compared with that of 1998. • 60,000 apartments installed with solar heating systems. 122011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=13http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=13Curtains pulled back to reveal a green future The million city Baoding and Danfoss have entered a cooperation agreement. Baoding is one of china’s eight green trial cities. Every major Chinese city has them: large exhibition rooms containing a model of the city for interested visitors to lean over a railing and look at. ’There it is, and isn’t that …?’ The chatting is regularly interrupted. The lights are switched off, and spectacular sound and visual shows reveal how it is planned to develop the city and surrounding areas. Here we will live, there we will build new high-speed rail stations, and this is where the parks will be landscaped – in addition to all the plans related to commercial development, national road networks, recreational areas, demolition of areas unfit for use, etc. And all this accompanied by triumphant Star Wars-like music. When the lights are turned on, you are left out of breath. Baoding is no exception. It is a million city, located 140 kilometers south-west of Beijing, and, at the time of the last emperor, the Qing Dynasty, it was a key buffer against the southern opponents of the regime in the capital. The city is one of eight green trial cities in China, a low carbon city, with very high ambitions. In Baoding, the exhibition is located at the Power Valley Jinjiang International Hotel, which is linked to one of the city’s flagship companies: the solar cell company Yingli having 18,000 employees distributed at seven factories. The hotel has solar cells integrated into its facades and ceilings and is therefore able to keep itself self-sufficient in terms of electricity for lighting – the showcase for the Baoding of the future. lED-lights in the streets Out in the streets, traffic lights are installed with energy-friendly LED-lights, which run on electricity generated by solar cell panels mounted at the top. And on the roof of apartment blocks, the solar systems contribute to the provision of hot water. But, walking around the city, you also notice that a lot still needs to be done. There is still a long way to go to fulfill the impressive model of the future. This goes for areas of the city which are a long way from the hotel’s future world made of steel, glass and low energy. Baoding’s local government and Danfoss agreed on a cooperation agreement a few months ago. No contracts have yet been signed for specific projects, but Division President of Danfoss District Energy, Lars Tveen, has offered to provide the local city government with calculations of the energy savings that the city’s public buildings could obtain through a renovation of their heating systems. We meet with Mayor Li Qian at the hotel. He is looking forward to the cooperation and emphasizes that Baoding’s selection as a green city has contributed to attracting researchheavy industry within the solar, wind and electronics sectors. ”And we have managed to cut down on CO2 and make the city a better place to live.” Cleaner air in the city Another advantage is the fact that all of the waste water is now being purified. Over the past five years, the air quality has been measured on a daily basis and last year, it was rated in the second-highest category for 310 days. In two to three years’ time, the last of the 5,000 small coal-fired heating plants with consumption of more than four tons of coal annually will have been renovated. This last information comes from Yin Xulong, the Vice Director of the local department of National Development and Reform Commission, a very important institution that has broad administrative and planning control over the Chinese economy. It is his job to monitor coal consumption, among other things, in Baoding, and according to him, it will not be a problem to meet the central government’s target of reducing CO2 emissions by 40-45 percent by 2020. China is a rapidly expanding economy and as such, it calculates the target as a share of the gross national product. For example: in 2005, Baoding consumed 1.25 tons of c2011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=14http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=14celebrating top results all over the world Danfoss has made the 2009 loss into a huge profit in 2010. The good result has been celebrated all over the world in creative and colorful ways. here, you can read about what’s been happening and see pictures from some of the many celebrations. BY JANUS FLACHS MADSEN 142011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=15http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=15Copenhagen Drummers, Fredericia Denmark Denmark, fredericia Big Party. More than 4,000 employees from all over the country were driven to the city of Fredericia by bus to have a huge party. Some of the biggest Danish music stars performed. And the employees were provided with free food and drinks. indonesia, Jakarta and malaysia Dinner and a movie. In Indonesia, seven employees met for dinner and drinks in Hotel Mulia – a five-star hotel in the capital Jakarta. Everyone was given a branded semi-formal jacket as a present. In Malaysia, the employees met for dinner and afterwards they went to the cinema. The film that they saw was “127 hours”. uSA, milwaukee and lovespark Games. More than 200 employees were driven to a game center, where they had a nice dinner. The menu was Italian and Mesquite style food. After dinner, the employees participated in a lot of games: computer games, basketball and other enjoyable activities were on the menu. 152011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=16http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=16Germany, bad homburg Crime dinner. Ten employees from the Danfoss Burner Components sales team got together for a nice dinner. Actors put on a show during which two people were ’killed‘, and the guests were asked to find the murderer. It was a night with good food and the singing of songs. venezuela, Aragua Rum production plant. The staff from Venezuela had a fun day out at Hacienda Santa Teresa, a rum production plant where they make some of the best and most famous rum in the country. The day included a tour round the different types of distillations, a visit to the house of the original owners and of course: a taste of the rum. italy/france, briançon Skiing in the sun. The Italian employees spent a day in the mountains. Some went skiing and others had a good time in the beautiful French city of Briançon. The day ended with good food and wine. Chile, Santiago Riding the wave. In Chile they celebrated by putting on wetsuits and riding body-boards on big waves in the sports resort Wave House. Chairman of the Danfoss Board, Jørgen M. Clausen, and his wife Anette participated in the celebration as they were travelling through Chile. middle East, Dubai Fun by the sea. The day of celebration for Danfoss Middle East began with breakfast on a catamaran cruise, where the employees went for a swim. The day continued with different water activities and relaxation. At the end of the day, the best employees were honored with awards. Poland, Grodzisk Casino, prizes and gifts. 450 employees dressed in long dresses and elegant suits celebrated in style. A casino, where you could win “Danfoss Money”, was opened for the occasion. Every employee was given a brand new Swatch watch, and a lottery was held, where they could win prizes. 162011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=17http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=17mexico, monterrey Dancing in a tent. On a sunny Saturday, the Danfoss employees in Mexico got together for dancing, live music and good food. It all took place in a big white tent. The menu was tacos, burgers and antojitos – a buffet of small Mexican dishes. brazil, Sao Paolo Charity. Areas close to Rio de Janeiro were hit by heavy landslides in January. More than 800 people died and thousands were left homeless. Therefore, Danfoss in Brazil decided to spend the money for the celebration on helping the victims of the natural disaster. Russia, volen, moscow Winter sports. 170 employees from the Moscow area went to the ski resort of Volen to go skiing, snowboarding, ice-skating and to play ice-hockey for a day. Those who were beginners were helped by instructors. A similar event was held for employees in Novosibirsk. The day ended with dinner, drinks, dancing and karaoke. China, Wuqing, beijing and Guangzhou Lucky draw. In China they had events in three different cities. There were different performances by the employees in the afternoon, and in the evening there was dinner followed by speeches and karaoke. The highlight was the lucky draw lottery, where you could win fine prizes, for example iPads, iPods, steam irons and food products. Slips of paper with the employees’ name on them were put into a bowl, and the lucky winners were drawn. india, Chennai Up in the air. The employees from Chennai in the south-west of India celebrated by spending a day at World Tribe Ranch – a place where you can ride ATVs (four-wheel motorcycles), shoot paintball, ride a mechanical bull and try out many other activities. The most popular was the ejection bungee, where the rider was ejected to a dizzying height several times, before the spring returned to normal level. 172011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=18http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=18Danfoss iT meant for everyone calling the iT ServiceDesk at 6111 to be put through to china, but language difficulties and user surveys have meant that employees will, as far as possible, get support from a local iT employee. Moreover, language tests have been organized for the supporters to improve their english. BY JANUS FLACHS MADSEN user surveys force Danfoss iT on new course Timeline 1994: Danfoss employees are, for the first time, invited to call 6111, if they experience computer problems. 1999: the support and service desk departments are gathered to form one global unit. 2003: All Danfoss employees can call 6111 around the clock, seven days a week. 2009: Service Desk is run centrally from China, with the support of other countries. 2010: Employees calling 6111 are supported by a local IT supporter, if available. 182011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=19http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=19To begin with, the plan was for everybody to get help from China so that every Danfoss employee who called for help to solve a problem with their computer would be put through to a central service desk in China around the clock, seven days a week. However, extensive surveys revealed that this created problems. User surveys based on feedback from 450 to 500 users are carried out on a monthly basis. And the user surveys showed that Danfoss employees would prefer a more local approach, which means they would like help from an employee who speaks the same language as they do and who is familiar with the local IT conditions. language barriers Problems with language were one of the factors that forced IT to turn the ship in another direction. Even though many Danfoss employees have good English skills, it can be difficult to talk about IT in a language which is not one’s mother tongue. “We primarily wanted to reduce the response time and we managed to reduce it to as low as an average of less than 30 seconds, but we do acknowledge now that the employees we help do not consider this important. We simply did not focus enough on the language problems,” says Erling Jørgensen, Senior Director IT. We will continue to make an effort to make sure that the quality of service from China is improved even more. And this will be applied to units in Denmark, countries in Europe and small units in Russia, Mexico, Brazil and the USA. If, for example, you call 6111 from Denmark, you are most likely to get help from a Danish employee, if you call the number within normal working hours. After 4pm, you will be helped by an employee in China. new iT strategy Meanwhile, employees in China are being tested and are receiving training to make sure that their level of English is sufficient to help Danfoss employees globally. One of the goals is for IT problems to be solved at the first attempt, which means that the majority of employees needing support from 6111 get their problems solved as far as possible before the conversation ends. Work has been initiated to determine a new IT strategy for Danfoss, which will define the future IT support activities. “The work to develop the new strategy will, of course, involve thorough evaluation of all of our new initiatives,” says Erling Jørgensen. ” We simply did not focus enough on the language problems Erling Jørgensen Senior Director IT 192011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=20http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=20Andre mendes Camillo, aged 20, Student, Sao Paolo, brazil Andre has studied English for four years, so he has no problems sorting out IT problems for employees in the USA and Europe. However, it can be easier to help the Americans because they are better at explaining the problem. “I sometimes find it difficult to grasp what the employees from, for example, Switzerland or Spain, are saying because of their heavy accents, and it can be tricky for them to describe what’s wrong in English. But we can log into their system and find out that way,” says Andre Mendes Camillo. He says that the Americans most often need help to solve password problems, while a large number in Europe request help with the VPN connection. hanne bach-hansen, aged 42, Application Analyst, nordborg, Denmark If you try to reach 6111 between 8am and 4pm in Denmark and press 1, 3 or 4, the chances are you will get through to Hanne. Employees usually ring about problems with passwords, log-in or SAP. Hanne also knows about the language problems. “Curious misunderstandings can occur, because not everyone is good at English.” She says that it’s also possible to e-mail Service Desk using your own language, but if you choose that, you should be prepared for a longer waiting time, than if you write in English. An Wei (iris), aged 30, iT help Desk Analyst, Wuqing, China An Wei works both night and day shifts. During the night shifts, she mainly services European employees, while she primarily helps Chinese employees during her day shifts. An Wei has worked in Danfoss IT since the summer of 2010, and she has noticed that Danfoss is beginning to recover from the crisis. “You sense that the work load has increased recently. Danfoss is hiring new employees at its global sites and this means that many call to ask for help with log-in and password,” says An Wei. They help you when you call 6111 202011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=21http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=21facts Simply the best 2,800 times as high as the Eiffel Tower in Paris, France. That would be the result, if you placed the ten million ignition units, which have so far left the factory in Nordborg, Denmark, on top of each other. The so-called EBIs are used to ignite gas or oil in a burner, and recently, the employees at Danfoss Burner Components celebrated the excellent sales; enjoying canapés, white wine and speeches. To mark the celebrations, the EBI team gilded two units which will be placed in display cases to commemorate the major sales. “We are pleased to be able to celebrate the fact that the customers continue to recognize the product. We have a great market share and many of the original products are still in use,” says Senior Director Peder Helmuth Hansen. Danfoss product the greenest in india “Shaping the future for a sustainable tomorrow.” This was the theme of India’s biggest exhibition in the refrigeration & air-conditioning industry, the so-called ACREX. And, apparently, shaping a sustainable tomorrow was exactly how a panel of judges characterized the Danfoss Micro Channel Heat Exchanger (MCHE). The product won the Green Product Award at the ACREX 2011 exhibition in New Delhi for its environmentally-friendly potential. The MCHE replaces the traditional heat exchanger in refrigeration and air-conditioning units and is completely aluminum constructed, thereby allowing for increased energy efficiency of 10 percent and up to 50 percent refrigerant reduction. “Everything came down on us” What do you do, when you find yourself in the middle of one of the biggest natural disasters in the history of Japan? This was what Claus Tønnesen, President of the Management Board of Danfoss Saginomiya, suddenly had to consider. ”We were in a meeting on the 7th floor of Saginomiya’s main office in downtown Tokyo, when with a smile the Japanese participants asked whether I could feel the earthquake. I couldn’t really, but then the entire building began to tremble fiercely. The Japanese quickly ordered us to sit under the tables, because ceiling plates, lamps, pictures, air shafts and everything else began to fall down. I stayed in the office until 10.30pm but back at the hotel, my room was on the 39th floor and it was rocking!,” Claus Tønnesen reports. A sure bet in las vegas Thousands of hotel rooms and condominiums, 38 restaurants and bars, a shopping mall, and a big casino. It requires a lot of energy to run the largest commercial CityCenter in the USA. The building complex is located in downtown Las Vegas, but thanks to 744 Danfoss VLT Drives the complex’s electricity bill will be dramatically reduced. Data from the constructor, MGM Resorts International, show that the property-wide implementation of Danfoss VLT Drives on all heating, ventilation and air-conditioning motors exceeding 5 hp has improved the complex’s energy performance, making it possible to save more than 58 million kWh annually. The savings will equate to taking a typical power plant off the grid for a full six days of operation. 212011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=22http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=22have you ever wondered about the day-to-day life of colleagues overseas? if you have, then read this report in which global Danfoss accompanies production employee elvera Buss, who is based in germany, from the morning walk with her dogs until she finishes work. By OLE KANStRuP Calling for assistance if the machines break down Elvera is a production employee at Danfoss Silicon Power, Germany, which produces power modules for the wind turbine and automotive industry. She adjusts the machines to make sure they turn out the correct versions of the hundreds of different module sizes produced at the factory. ”The days are alike, but we are busy so we seldom get bored. The machines are a bit complicated, but we have received good training. The only thing we are not allowed to do is trying to fix the technical parts, if something jams. But, on the other hand, we know how to call for the machine technicians quickly.” Work & leisure facts Elvera Buss is 49 years old and lives in Rendsburg, a little to the south of Flensburg, with her husband Jens Uwe. The couple has two grown-up sons, aged 23 and 30. Elvera has been with Danfoss for three years. This article is the first in a series where Global Danfoss takes a look at the daily life of employees worldwide. Trip to work is too boring alone The trip from Rendsburg to the factory in Schleswig takes 50 minutes but the chatting begins in the car. First, her colleague Michael comes by her house, and then they drive to Fockbek, where they get into a different car with two other colleagues. Then, all four drive the final 20 minutes to the parking lot. 222011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=23http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=23ludo and walking the dog instead of extreme sports To Elvera, the good life equals a quiet life. So, she fills her spare time with her two dogs and happy hours with her grand-child Tom Patrick, aged seven. ”He loves to play ludo, draw or simply just talking, and that’s the kind of things I enjoy too. That makes you relax a lot. Climbing mountains or travelling the entire planet is not my kind of thing.” time in Schleswig When he gets home, she leaves According to Elvera, there is only one thing about the job at the factory in Schleswig that rankles slightly: the two Saturday shifts per month. Her husband works as a bus driver, working from 4am until the afternoon. She alternates between working evening shifts every second week and day shifts the other week. ”We don’t see much of each other on weekdays. Working shifts works well for me, but it does rankle slightly when you don’t get to spend time together over the weekend and perhaps even have to skip a family dinner when our two grown-up sons come visiting.” Turns up early for work as a matter of choice Every day, Elvera Buss turns up at work 30 minutes before work begins to have time enough for a cup of coffee with her colleagues. ”We have an amazing time in our small department, and we always meet in the break room to discuss the world situation and laugh at each other’s bad jokes before going back to the machines again. We are like a family where you celebrate birthdays and give a pat on the back to those who are sad about something,” she says. 232011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=24http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=24Leaders take to the floor over the years, the employees have completed them but now, it is the top management who will get out on the floor to get familiar with the tools from Danfoss Business System. This will ensure a more rapid distribution of DBS. In the past six months, Danfoss leaders have taken off their suit jackets and ties and put on jeans and a sweatshirt instead to head off for the factory floor. There, they toured the production lines bringing with them a stop watch, video camera or a whiteboard to find improvements. The exercises are part of an extensive operation, in which all the leaders from the top three levels are set to receive training in Danfoss Business System’s (DBS) four programs. This initiative is being carried out to equip the leaders so that DBS tools are spread more rapidly to every corner of Danfoss, thereby creating even larger profits. ”Danfoss has considerably improved the bottom-line by applying the DBS programs. The next step is to accelerate the reach of DBS to cover even more areas within Danfoss,” says Bendt J. Jørgensen, the Head of Danfoss Business System. Receiving training every second year Currently, the top 66 leaders in Danfoss have been sent off to the production areas to get practical experience on how to improve quality, increase the capacity of a production line, get even closer to the customers or design products which will result in the largest possible profit. Subsequently, the leaders in the business areas will follow suit. The idea is for leaders to become role models and to provide inspiration and support to enable their employees to generate further improvements, explains Bendt J. Jørgensen: ”DBS is how we do things here at Danfoss. But, in order for the employees to agree to the BY ANDERS MCCULLOCH changes, the leaders must lead the way. The courses are also about becoming more visible as a leader and getting better at understanding the customers’ daily work,” he says. So, it is not enough that the leaders have taken part in the four training programs. Going forward, they will complete two so-called KAIZEN events every second year in the divisions to which they belong. The events aim at establishing improvements on a production line or other parts of the business. The leaders will also take part in two audits, when the DBS corporate function evaluates the extent to which the various departments at Danfoss apply DBS tools. The prospective outcome of the initiatives is making sure that the leaders stay updated on the tools and make practical use of them. 242011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=25http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=25DbS’ four programs: • Danfoss Productivity Program aims to improve quality, delivery reliance and to avoid waste. • Full Purchasing Program aims to reduce total costs through, among other things, cooperation with suppliers on the optimization of the supply chain. • Danfoss Sales Program aims to increase growth and profit. • Product Development Program aims to identify the products and services of the future and to launch them faster, better and more profitably. The DBS training programs run for four days and involve theory and practice. Thomas visits the engine room How do you get more heat pumps through final assembly without having to invest in new equipment or hiring more employees? This was part of the task that Thomas Madsen – responsible for business development at Danfoss Heating Solutions – was asked to tackle when he participated in a DDP training program in Grodzisk, Poland, along with the rest of the division’s management and part of the Group Committee. The managers were sent off to the shop floor to identify possible improvements in the production through what is known as a ‘KAIZEN event’. Holding a stopwatch and talking with the employees, Thomas Madsen and three of his colleagues examined how the final assembly of heat pumps could be made more flexible. One of the answers was the refurbishing of the internal warehouse, so that employees do not waste time fetching components for use on the production line. The managers also proposed introducing uniform work procedures by learning from the employees who have the most efficient work methods. ”Our improvement proposals make it possible to keep staffing levels at the two shifts presently working on the line, thereby avoiding the need for a more expensive third shift or investments in production equipment. And this is despite the fact that we expect the demand for heat pumps to increase significantly in 2011,” says Thomas Madsen, who adds that he has enjoyed talking with the employees about their daily challenges. The people on the production line have also benefited from having a top manager for a colleague. ”I was performing my daily tasks as per usual and I recognize that the remarks made at the end of the KAIZEN event by people who are not directly responsible for the production process, are very valuable and helpful,” says Production Operator Krzysztof Lipiński. 252011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=26http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=26The past in close-up By OLE KANStRuP Do you recall the summers when the production ladies sat with their feet in a bucket of water to cool themselves? Or the colleague who talked aloud to himself on the toilet? The group of retired employees from Appliance Controls in Nordborg, Denmark, flicked through the memories, when they met in March to talk about the old days over a cup of coffee. The occasion was that Appliance Controls will celebrate its 60th anniversary in May as a producer of refrigeration thermostats. And most of them agreed that things were more fun in the old days. ”Today, anyone can deal with most tasks using a computer. Previously, you had to leave your desk to get something done. That way, we had a lot of social contact,” recalls 70-year-old engineer Niels Thorsen, who had his first work day in 1966 and has since then been a production technician, a designer in the development department and a sales responsible. He was backed up by his former manager, 85-year-old Bjarke Hallenslev: ”We were like one big family back then. But, the reason probably is that there were not as many people as there are today. We all knew each other.” Still turning up Seven elderly employees sat down at the coffee table. And a few of them still keep turning up at Danfoss to give a helping hand. ”The golf course is not my cup of tea. I prefer to spend some of my spare time as a pensioner helping out at Danfoss,” says Niels Thorsen, who most recently contributed to the development of a new type of thermostat. Did they always look like that? 85-year-old Bjarke Hallenslev (right) and former manager of the production technicians scrutinize a refrigeration thermostat. From deficit to profit Over the past few years, Appliance Controls has turned its business from making a loss into making a profit. Last year, the business unit generated an EBIT of 13 percent, which means that it earned 13 USD every time they sold goods worth 100. The shift was caused by a restructure, which since 2005 has involved the shutting down of production lines in Denmark, Slovenia, Italy, Mexico and Brazil – partly because the wage level was high in Denmark and Italy, in particular; and, partly, because the factories spent large sums on transporting products for further processing between them. The production is now consolidated in Slovakia and China, where by far the majority of Appliance Controls’ 432 employees are based. 262011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=27http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=27MAKING MODERN LIVING POSSIBLE Annual Report 2010 The Danfoss Group www.danfoss.com2011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=28http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=28Kim Fausing 28 Niels B. Christiansen Nis Storgaard2011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=29http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=29MANAGEMENT REPORT Danfoss comes out of the crisis strengthened The world’s increasing interest in climate and energy-efficient solutions, the group’s new focused strategy and the consistent handling of the challenges of the global downturn have turned around the development of the company, which has emerged from the crisis in a considerably stronger position. The year 2010 was a turning point for Danfoss. Following the large loss in 2009 and, unfortunately, the many cuts in staff, we launched our new strategy at the beginning of 2010. It contributed to overcoming the crisis, and it has put us on the right course towards an even stronger Danfoss than before. With the new strategy, we are well equipped for utilizing the opportunities that exist within the climate and energy field. The new strategy will also help us avoid ending up in the same situation as during the crisis, when we were forced to implement extensive initiatives to secure earnings. We have an ambitious strategy for the period until 2015. One of its key elements is an increased focus on the core activities where we have a leading position in the global market. Furthermore, we have intensified the development of new and innovative climate and energy-related solutions, an area in which Danfoss already has both the experience and strong market positions. Focus on the core activities also implies that we are convinced that some business areas would be better off if they were run by different owners. Some of these activities are gathered in Danfoss Development. In 2010, we made a decisive move when we sold Danfoss Household Compressors, with approximately 3,000 employees, to the German company AURELIUS. The divestments of our non-core activities are, on the whole, expected to be completed over the course of 2011 and 2012, after which we will be able to concentrate on the development of the core activities. Sourcing is another key element of the execution of our strategy. We can establish that there are suppliers and partners who would improve our overall competitiveness and efficiency in some areas where Danfoss does not have the necessary competencies. We are therefore in the process of making a targeted effort to reduce the number of external suppliers and, at the same time, make a closer tie between them and Danfoss in binding partnerships. We also leave the functions and processes to partners whose competencies and special skills exceed ours. The markets in the BRIC countries (Brazil, Russia, India and China) drove the growth in 2010, and these markets are becoming an increasingly important factor for the group. We are pleased to see that many of the investments that we have made over the past few years are making a major contribution to the group’s overall net sales and earnings. The BRIC countries will also contribute substantially to improved growth in 2011. Sauer-Danfoss proved in 2010 that it was the right decision to increase the ownership share in the company. The previous year was an extremely difficult year for SauerDanfoss, but with the help of the implemented cost adjustments and intensified efforts, the company’s Management and employees were able to turn the development around in 2010, to the effect that Sauer-Danfoss ended the year with a very satisfactory result. We owe all of the employees in the Danfoss Group a big ‘thank you’ for their great work and the flexibility they exhibited in 2010. Without their efforts and support for the new strategy, we would not have been so convincingly ahead of our own plans. As a result, we are now able to conclude – at an earlier stage than expected – that, following the crisis, Danfoss is well-prepared for the future, stronger and more flexible. Danfoss focuses on supplying products and solutions for the climate and energy sector, which create more value for our customers and which also help save energy and reduce CO2 emissions. This is exemplified by Danfoss Solar Inverters, which had an excellent 2010, including2011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=30http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=30The Danfoss Group 2010 in brief 2010 highlights The Danfoss Group’s financial result in 2010 was the best ever in the group’s history. The results were achieved on the basis of the global interest in climate and energy solutions combined with Danfoss’ major presence on growth markets worldwide. Consequently, the year 2010 also confirmed that our new strategy – entitled Core & Clear and introduced at the beginning of the year – not only proved to be the right antidote to the severe crisis that hit the world economy in 2008 and 2009, but was also an effective revival of Danfoss’ competitiveness and strength. Sales on the group’s markets developed better than expected throughout 2010, with the second half-year, in particular, showing very positive development. Market shares were gained on several markets and the already implemented initiatives in the group’s strategy, together with a tight cost control and improved capacity utilization, resulted in a substantial increase in group earnings. This meant that Danfoss, in 2010, made an upward adjustment of its expectations in all of the quarterly reports. In 2010, Danfoss focused on generating a considerable positive cash flow, and will maintain this in 2011 too. The primary purpose is to reduce corporate debt. In 2010, this was achieved through considerably improved earnings, among other things, and cautious investments. These measures had a positive effect on the group’s free cash flow, which reached a profit of 2,646m DKK. 30 • net sales increased by 31% to 31,550m DKK from 24,165m DKK in 2009. Calculated at last year’s exchange rate and adjusted for acquisitions and divestments, growth was 25%, compared with −12% in 2009. • The result before other operating income and expenses was 3,400m DKK compared with −40m DKK the previous year. • operating profit (EbiT) was 3,264m DKK compared with −1,431m DKK the previous year. • The result from continuing activities before tax was 2,944m DKK compared to −1,119m DKK the year before. The result for the year from continuing activities (after tax) was 2,207m DKK compared to −767m DKK in 2009. • The result for the year from discontinued activities was a loss of 829m DKK compared to a loss of 635m DKK in 2009. • The result for the year was 1,378m DKK compared to −1,402m DKK the previous year. The result is considered very satisfactory. • The free cash flow was 2,646m DKK compared to 964m DKK the year before, while the free cash flow, before M&A, was 2,792m DKK compared to 1,906m DKK in 2009.7 • The net interest-bearing debt was 6,675m DKK compared to 9,144m DKK the year before. The current net interest-bearing debt level equals 1.3 × the EBITDA of the year. • The dividend is proposed fixed at 10%. Expectations for 2011 Based on the positive development in 2010, Danfoss expects a continued increase in net sales and earnings in 2011. The increase will primarily be driven by the growth markets in the BRIC countries (Brazil, Russia, India and China), which are also expected to show double-digit growth rates in 2011. Growth is not expected to be at same high levelas in 2010, when the comparative figures were based on the tremendously negative trends of 2009. The markets in North America and Europe are expected to progress moderately but nevertheless grow, and the important German market is also expected to develop positively. • Net sales are expected to increase to a level between 33 and 34bn DKK. The ongoing restructuring activities and the continued measures of the group’s new strategy are expected to continue to have a positive effect on Danfoss’ profitability. • EBIT is expected to increase to a level between 3.3 and 3.5bn DKK. The expectations do not include the impact of divestments, discontinued activities or acquisition of companies/activities2011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=31http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=31Financial highlights mill DKK 2006 PROFIT AND LOSS ACCOUNT Net sales Operating profit added depreciations, amortizations and impairments (EBITDA) EBIT excl. other income, etc. Operating profit (EBIT) Income from associates and joint ventures after tax Financial items, net Profit before tax of continuing operations Result from discontinued operations Net profit BALANCE SHEET Total non-current assets Total assets Equity Net interest-bearing debt Net assets Capital expenditure CASH FLOW STATEMENT Cash flow from operating activities Cash flow from investing activities hereof acquisition of intangible and tangible fixed assets hereof acquisition of subsidiaries and activities Free cash flow before M&A Free cash flow Cash flow from financing activities NUMBER OF EMPLOYEES Number of employees (headcount) KEY FIGURES Real net sales growth (%) EBIT margin excl. other income, etc. (%) EBIT margin (%) EBITDA margin (%) RONA (%) Return on equity (%) Equity ratio (%) Leverage ratio (%) Net interest bearing debt to EBITDA ratio Dividend ratio (%) 2007 2008 2009*) 2010*) 19,428 2,425 1,411 1,601 91 -290 1,038 1,038 22,196 2,576 1,634 1,616 210 -448 1,063 1,063 27,535 2,099 687 410 44 -579 -157 -157 24,165 1,354 -40 -1,431 -37 349 -1,119 -635 -1,402 31,550 5,053 3,400 3,264 14 -334 2,944 -829 1,378 10,132 18,534 9,035 2,866 10,736 3,401 11,054 19,857 9,744 3,737 12,227 1,931 21,237 32,928 11,867 9,776 21,326 12,614 19,289 28,642 10,055 9,144 18,995 1,009 18,703 29,868 11,700 6,675 18,167 973 1,321 -3,020 -915 -1,936 396 -1,699 1,877 1,016 -1,593 -1,399 -310 -423 -577 431 1,428 -4,543 -2,167 -2,383 -639 -3,115 3,050 2,858 -1,894 -895 -893 1,906 964 -733 3,387 -741 -634 -132 2,792 2,646 -2,037 20,612 22,323 31,717 25,740 23,392 14 7.3 8.2 12.5 16.8 11.9 48.6 31.8 1.2 20.0 12 7.4 7.3 11.6 14.1 11.4 49.0 38.4 1.5 25.0 2 2.5 1.5 7.7 2.4 -0.9 36.0 82.4 4.7 20.0 -12 -0.2 -5.9 5.6 -7.1 -13.0 35.1 92.5 6.8 0.0 25 10.8 10.3 16.0 17.6 12.3 39.2 62.2 1.3 10.0 *) The Profit and Loss Account and the Statement of Cash Flow for 2009 and 2010 have been affected by the Group's reclassification of discontinued activities to separate lines in the accounts. For further information about the effect, see note 27. Discontinued operations. In situations where the key ratios have been defined according to "Recommendations & Key Figures 2010", as prepared by the Danish Association of Financial Analysts, the ratios are computed according to these definitions. 312011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=32http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=32322011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=33http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=33Corporate Citizenship The Danfoss Group has joined the UN’s Global Compact and strives continuously to take a proactive stance in terms of the standards and legislation which ensure sustainable development. This means that Danfoss wishes to play an active role in the sustainable global development where social responsibility and environmental and climate considerations go hand-in-hand with sound business development. We make it a priority then that we not only respond to the circumstances which have an immediate effect on the company, but also consider the trends that give a hint of the challenges of the future. It is Danfoss’ overall target that the company is regarded in all matters as a responsible company that keeps its own house in order. Engagement and dialogue Through active dialogues with employees, leaders and external stakeholders, Danfoss strives to act appropriately and adapt the company’s processes and tools within Corporate Citizenship to the changing situation surround us. Entering into dialogues with interested parties and NGOs is part of this work and helps ensure that Danfoss is familiar with the basic conditions of business operations in the countries where we are operating. Knowing about new laws or new initiatives introduced by organizations, or being challenged concerning our stances and policies, are valuable and necessary elements of the preparedness which Danfoss constantly maintains in order to be able to meet global challenges. Continuing support of the Global Compact Danfoss joined the UN Global Compact in 2002. It forms the basis of the company’s work in environmental and social responsibility. Danfoss’ obligation toward the Global Compact has been further strengthened with the support of the initiative “Caring for Climate”, committing ourselves to set specific reduction targets for Danfoss’ global CO2 emissions. Ethics and anti-corruption Danfoss revised in 2010 the Danfoss Ethics Handbook, which incorporates ethical guidelines for employees throughout the group. This includes a number of tightenings relating to, among other things, the handling of the grey areas within corruption and bribery. In order to make sure that the guidelines in the Ethics Handbook are translated into action, all leaders with employees reporting to them must sign a commitment to fulfill the guidelines and communicate the contents to their employees. The Ethics Handbook was distributed to all of the 17,373 employees (excl. SauerDanfoss) in mid-December 2010. unethical behavior It is not possible to assess business ethics using the policies and declarations of a given company. It is necessary to both ensure correct implementation and, subsequently, measure whether the implementation was effective. For this purpose, Danfoss applies the ”People Manager Survey”, a questionnaire about business ethics sent to 2,040 leaders with employees reporting to them. A total of 1,888 leaders, which is 91.8%, responded to the survey. The responses show that 36 employees were dismissed or made the decision to leave Danfoss due to unethical behavior in 2010. Add hereto four dismissals that were not reported via the People Manager Survey, but were reported by the Ethics Hotline at Danfoss. In 2010, there have been a total of 40 cases of dismissals/voluntary resignations due to unethical behavior in Danfoss. This is an increase compared with 2009, when the number was 29. Suppliers Danfoss has 4,259 suppliers of goods for production purposes. The suppliers are located worldwide and many are operating in areas where respect for human rights and labor rights cannot be assumed. For this reason, Danfoss has worked systematically over the past seven years to raise the standard of the supply chain. At the same time, Danfoss is striving to consolidate the number of suppliers to a few hundred. In 2010 Danfoss has strengthened its responsible supplier control organization by setting up two new Code of Conduct offices. At headquarters in Nordborg, Denmark2011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=34http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=34Working environment and safety Every company in the group prioritizes working environment and safety, as set out by Danfoss’ environmental and working environment policy, which defines the issues and target area that the business units must address. The policy establishes that our business activities must be planned and executed in consideration of the employee, the working environment and the external world. The number of work accidents has dropped since 1999, when the accident rate exceeded 28. In 2010, the rate was 12.8 compared to 15.5 in 2009. The accident rate is defined as number of accidents per 1 million working hours. There were 184 accidents in 2010, resulting in at least one day’s absence. The injured employees were absent for a total of 4,697 days, which corresponds to an average of 25 days per accident. In 2009, the average was 20 days, so the accidents that took place in 2010 were slightly more serious than those of the year before. Climate Danfoss is facing the substantial challenge of climate change, as does the rest of the world. Climate change has been proclaimed one of the biggest societal challenges of our time. The energy used by enterprises adds to the emissions of greenhouse gases that cause climate change, and every responsible company is therefore required to prepare ambitious targets to reduce emissions. Danfoss aims to contribute as much as possible to the global reduction of CO2 emissions from energy-consuming processes and plants. Meanwhile, Danfoss’ products must result in energy-savings for the customer. We also wish to use our expertise and products to reduce Danfoss’ own emission of greenhouse gases from production and transportation. Danfoss aims to minimize the company’s CO2 emissions as much as possible, taking into account our future competitiveness, the product quality and corporate finances. Danfoss wishes to take part in the reduction of global warming. This is to take place via the reduction of the company’s own emissions and through the increased sale of products, solutions and services from Danfoss Climate & Energy. Danfoss’ climate strategy is referred to as 3×25 and requires that Danfoss reduce absolute CO2 emissions by 25% and increase the share of CO2 neutral energy by 25% by 2025. Danfoss’ own Co2 emissions All factories have in 2010 recorded the energy sources used, such as wind, bio-mass or water power. It is an important prerequisite for calculating the group’s total emissions of greenhouse gases. The climate strategy targets an absolute reduction figure of approx. 1.4% annually, which means that the CO2 Danfoss emitted in 2010 was expected to be 4% lower than the emissions in the base year 2007. This equals 116,000 ton CO2. In 2010, Danfoss emitted around 137,000 tons of CO2 as a result of the group’s consumption of electricity and heat. The figure covers both the direct emission (electricity and heat production at its own plants) and the indirect emissions (electricity and heat from external sources). The 2010 emissions exceeded expectations by 21,000 tons of CO2, corresponding to 18% so, unfortunately, the conclusion is that the targeted CO2 reduction figure was not by any means reached in 2010. A more committed effort will be made to reduce emissions in the years to come. Environment Danfoss is a global company, and takes a social and environmental respon-sibility in the countries in which the group is operating. We will prevent pollution and will remove any unwanted environmental impacts, that our activities must result in ongoing and measurable improvements for the environment and climate, and that we show regard for the individual human being, the working environment and the external world. Danfoss’ Negative List forms the cornerstone of efforts to reduce the use of potentially harmful substances. The Negative List is a vital guideline in the development of products to make sure that unwanted substances are not applied in the production or filled in Danfoss’ products. 2011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=35http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=35People Shella is Core & Clear Shella Marie Ramos – Order Handler in Danfoss Dubai – is the most Core & Clear employee in the Middle East. Proof came when the employees in Dubai celebrated Danfoss’ profit and voted for who is best fulfilling the strategy. ”I really believe that Core & Clear is the right strategy for Danfoss – particularly because it places the customer at the center. And my work consists of precisely this kind of customer contact.” Roy and Jan are punching the air A total of 49 VLT® High Power Drives are on their way to seven of Dutch company NUON’s district heating plants in the Netherlands. This is the largest number of High Power drives ever sold to a single Danfoss customer located in the Netherlands. ”We are punching the air. It’s fantastic. And NUON is Holland’s largest district heating supplier, so we will be pushing for more orders in the future,” says 30-year-old Roy de Jong, Sales Engineer at Power Electronics, Netherlands, who together with sales colleague Jan de Wit got the order in the bag following four months’ concerted effort. Saving a quarter of a million kilometers Michael Schumburg, Marketing Manager at Danfoss District Energy in Hamburg, Germany, proudly presents a certificate from the German company Interseroh, which Danfoss has engaged for the collection and reuse of packaging material from Danfoss District Energy products sold in Germany. According to the certificate, the obtained annual CO2 savings correspond to 257,184 km by car. ”This shows that even small steps counts and that it is a good idea for Danfoss to engage in environmental activities,” he says, adding that it is a widespread practice in Germany for companies to have a recycling company collect and reuse their packaging materials. Clean sheet in testing times Hua Zhou (Joe), quality engineer at the Refrigeration & Air-condition Laboratory in Tianjin, China, and his colleagues held their Spring Festival vacation with a broad smile this year. The day before the beginning of the festival the RA-Lab achieved the ISO17025 standard for the second time. China National Accreditation Service for Conformity Assessment (CNAS), which hands out the standard, visited the lab recently. And there were no mistakes to be found. 129 test items were tested and every single one was accredited. 352011-05-02T15:33:04+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=36http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2011/GlobalDanfossNo22011/?Page=36Danfoss around the world Slovenia valve chocolate made them smile in Trata February 4, 327 Slovenian employees enjoyed cake and chocolates shaped like Danfoss’ AB-QM valve. That was the day when the factory produced its 1-millionth valve – a so-called balancing and control valve, which helps reduce energy consumption in heating and refrigeration systems. According to the factory, the roughly one million AB-QM valves, which are currently in use on the market, save energy equalling 300,000 tons of CO2 every year. In the course of just a few years, Danfoss has gained a share of almost 65 percent of the market for balancing and control valves. poland Polish pumps impress viP guest The Danfoss factory in Grodzisk, a small town close to the Polish capital, Warsaw, had a very special guest recently. The former Prime Minister and now Vice Prime Minister and Minister of Economy, Waldemar Pawlak, visited the factory to find out how the government can help make life easier for private companies in general. And he was very impressed by the heat pumps, automatic controls and floor heating production at Danfoss Sp. z o.o. “I wasn’t aware that there are such interesting companies in Grodzisk Mazowiecki,” said Waldemar Pawlak. india Temple cooling system is good for the sole To reach the Golden Temple, the most holy place for Sikhs, in Amritsar, India, more than 100,000 feet have to walk barefooted everyday down a roofless corridor that gets extremely hot in the summer and cold in the winter. But thanks to a new cooling system from Danfoss India, future walks to the temple will feel like a walk in the park. A 3,000 square meter cooling and heating system will be installed under the floor of the corridor. In the summer, chilled water will be pumped around under the floor to lower the temperature and in the winter, warm water will be used to achieve the opposite effect. 362011-05-02T15:33:04+02:00