Company reduces production activity and freezes salaries as part of costs cutting
Equipment giant Danfoss has taken strict measures to secure its position in the rac market in the face of economic conditions it says are characterised by “reluctance, major uncertainty and nervousness.”
Danfoss grew turnover by 22 per cent to £3.1 billion for the year, but posted a pre-tax loss of £15 million, largely due to problems at its hydraulics business. The company maintains it has not lost market share and that its three divisions generated an operating profit of more than £120 million.
The company announced cuts in some production areas and a salary freeze for managers and employees in the face of a forecast loss for the year. Additionally, projects in its central corporate functions have been halted; Danfoss adds it will postpone activities for at least a year.
“With these rather extensive reductions, we aim to take the necessary steps to make sure we focus on defending our market shares and ensuring a sound profit, even though the crisis will continue for some time,” said Niels B. Christiansen, chief executive officer of Danfoss.
Danfoss estimates that current market conditions will continue for two years.