#1ENGINEERING TOMORROW Danfoss Danfoss - Bond Investor Presentation May 2023 Jesper V. Christensen, EVP and Group CFO | Flemming Lynge Nielsen, Director, Sustainability & ESG#2Disclaimer & Confidentiality This document contains confidential information and should be kept strictly confidential by the recipient to whom it is exclusively provided. It is expressly forbidden to disclose the information of this document or the fact that this document has been delivered to the recipient to any third party or to publish or disclose all or any part of this document or the information contained herein. This document may not be removed from the location of the related presentation. The information contained in this document has been provided by Danfoss A/S (Danfoss). The information and any opinions or statements made in this document have not been verified by independent third parties and no representation or warranty, express or implied, is made by Danfoss, BNP Paribas, Danske Bank A/S, J.P. 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A rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency. 2 Bond Investor Presentation May 2023 ENGINEERING TOMORROW Danfoss#3Agenda Stacy Danfoss in brief Core and green growth opportunities Lead in sustainability Financial performance & key highlights. 3 Bond Investor Presentation May 2023 5 6 13 7 14 03 08 15 22 ENGINEERING TOMORROW Danfoss#4Key investment highlights • Well positioned to capitalize on global mega trends and the green transition • • Robust and strong performing business segments with attractive market positions Stable profit margin and strong cash generation over the cycle • Prudent financial policy targeting minimum a BBB credit rating • Current Rating: BBB/A-2 with stable outlook We want to become the preferred partner in helping our customers decarbonize 4 Bond Investor Presentation May 2023 ENGINEERING TOMORROW Danfoss#5Our Purpose We engineer tomorrow to build a better future Decarbonizing with our customers Long-term value creation 5 Bond Investor Presentation May 2023 ENGINEERING TOMORROW Danfoss#6Danfoss at a glance Three strong businesses well-positioned in the green transition Worldwide sales in more than 100 countries Three strong business segments with leading positions Power Solutions Climate Solutions Power Electronics and Drives Leading technology partner for our customers who want to decarbonize through energy efficiency, machine productivity, low emissions, and electrification 97 Factories in more than 20 countries 1933 Long track record within innovation and engineering 41,928 Employees worldwide. People are the foundation of our business Well on the way towards carbon-neutral global operations by 2030 All numbers in this presentation represent 2022 numbers unless otherwise stated | Eaton included from August 2021 | Semikron included from August 2022 6 Bond Investor Presentation May 2023 ENGINEERING TOMORROW Danfoss#7Danfoss business overview Well-diversified sales across segments, geographies, and markets Three business segments geared for growth Danfoss Power Solutions 5.1bn EUR annual sales ⚫ 18,535 employees .52 factories ⚫ 3 Application Development Centers 50% of Group sales Danfoss Climate Solutions .3.2 bn EUR annual sales ⚫ 10,331 employees 31 factories ⚫ 4 Application Development Centers 31% of Group sales Danfoss Power Electronics and Drives .1.9bn EUR annual sales ⚫ 7,875 employees ⚫ 17 factories ⚫ 4 Application Development Centers 19% of Group sales All numbers in this presentation represent 2022 numbers unless otherwise stated | Eaton included from August 2021 | Semikron included from August 2022 7 Bond Investor Presentation May 2023 Three strong regions supporting our businesses Driving growth based on customer proximity, local application knowledge and localized supply chains 24% ■ Americas EMEA APAC 37% 39% ENGINEERING TOMORROW Danfoss#8Agenda Danfoss in brief Stacy 03 Core and green growth opportunities 08 Lead in sustainability 15 Financial performance & key highlights 22 5 13 6 14 7 8 Bond Investor Presentation May 2023 ENGINEERING TOMORROW Danfoss#9Investing in our core and green growth opportunities We help our customers to decarbonize OUR PURPOSE We engineer tomorrow to build a better future OUR STRATEGY 2 T Leading Portfolio Customers & Growth Innovative Solutions Lean & Agile Our aspiration is structured around five strategic focus areas We continue to invest in the future in our core businesses, digital and electrification to strengthen our position and realize the potential > Offer a seamless end-to-end customer experience and be the fastest, easiest, and most relevant company to do business with We use our deep application knowledge for differentiated, innovative, and sustainable solutions, creating value for our customers We serve customers with speed and cost-effectiveness, anchored in One ERP, flexible and agile supply chains and smart factories High-performing diverse teams are our strong foundation. We drive engagement by offering an inspiring and inclusive workplace and unlock the full potential of our people. OUR FOUNDATION High-performing diverse teams We want to be a top-performer among key peers, decarbonize with our customers, and drive long-term value creation 9 Bond Investor Presentation May 2023 ENGINEERING TOMORROW Danfoss#10Danfoss Zero emissions A TOMORROW 10 Bond Investor Presentation May 2023 Driving growth and long-term, sustainable value creation EUR 5.8bn EUR 10.3bn EUR 7.5bn 2017 2021 2022 Net Sales ENGINEERING TOMORROW Danfoss#11Climate Change Urbanization Food & Water Supply 11 Bond Investor Presentation May 2023 Electrification GLOBAL MEGATRENDS Transforming our world Digitalization ENGINEERING TOMORROW Danfoss#12Selected Danfoss applications - hot spots Leveraging the global megatrends across our segments Power Solutions Climate Solutions Power Electronics and Drives Digitalization Electrification Urbanization Autonomous grape harvester Full-electric excavators Construction machinery Food & Water Supply Climate change Agriculture machinery Energy-efficient hybrids HYBRID District energy with AI Heat pumps Single & multi-family Houses Connected supermarkets Data centers ENGIC DrivePro® Life Cycle Services E-mobility Cranes and elevators Food & beverage 12 Bond Investor Presentation May 2023 H₂ Power-to-X Hydrogen H₂ ENGINEERING TOMORROW Danfoss#13Our customer promise is as relevant as ever and drives our competitive advantage JOHN DEERE TRANE TECHNOLOGIES™ LEADING APPLICATION KNOW-HOW To be the partner of choice SUSTAINABLE INNOVATION Differentiate through technology, adding low-carbon products & circularity CNH INDUSTRIAL Berendsen Fluid Power VOLVO ASANY CAT XCMG G GC GRUPPE COMPETITIVE ADVANTAGE LEADING POSITIONS Exploit scale and operating model 13 Bond Investor Presentation May 2023 APPLIED Industrial Technologies Johnson Controls SAINT-GOBAIN Carrier ▼DAIKIN KONE PENTAIR 7F BEIJER REF RIVIAN X KRONES SIEMENS Gamesa RENEWABLE ENERGY ENGINEERING TOMORROW Danfoss#14Danfoss continues to invest ahead of competition to capture our core and green growth opportunities Organic Research and development costs CAPEX excluding M&A Danfoss continues to Research and development costs (EURm) CAPEX excluding M&A (EUR) 600 6.0% 600 6.0% make significant Research and development costs (% of net sales) CAPEX excluding M&A (% of net sales) 500 500 investments in new technology 4.5% 4.5% 400 400 300 3.0% 300 3.0% 200 200 1.5% 1.5% 100 100 0 0.0% 0 0.0% 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 Inorganic We have a proven M&A track record to further strengthen core business and capture green growth opportunities 14 Bond Investor Presentation May 2023 Further strengthen core Lead digital AAIM H HYDRAULIK NORD controls LEANHEAT Oggi Innovative into port Intuive VAGONⓇ ARTEMIS INTELLIGENT POWER SSONDEX EATON Hydraulics ZICO PROSA TII WHITE BOCK DRIVE PRODUCTS #1/#2 position in electrification VISEDO Electricity in Motion. IKUSI GE velatia LQM TECHNOLOGIES SEMIKRON AXCO motors ENGINEERING TOMORROW Danfoss#15Agenda Stacy Danfoss in brief Core and green growth opportunities Lead in sustainability Financial performance & key highlights 5 15 Bond Investor Presentation May 2023 6 13 7 14 03 08 15 22 ENGINEERING TOMORROW Danfoss#16Our step-change initiatives Danjos GLOBALLY CO2 neutral 2030 DECARBONIZATION ESG ENVIRONMENT | SOCIAL | GOVERNANCE CIRCULARITY 16 Bond Investor Presentation May 2023 DIVERSITY, EQUITY & INCLUSION ENGINEERING TOMORROW Danfoss#17Scope 1 114kt CO₂e Scope 2 305kt CO₂e " Combustion of fuels Purchased electricity Company cars Purchased heating in Leakage of cooling agents in factories 419kt CO₂e (0.6% of scope 1, 2, and 3 2019 baseline) 17 Bond Investor Presentation May 2023 Decarbonizing Danfoss with ambitious targets • • Approved science-based targets to limit global warming to 1.5°C for scope 1 and 2 However, targeting carbon neutrality in our operations by 2030 ENGINEERING TOMORROW Danfoss#18Our approach to become CO2 neutral latest in 2030 The way forward for Danfoss and the world to decarbonize 18 Bond Investor Presentation May 2023 Step 1 Step 2 Step 3 Energy efficiency mmreduce Energy recovery re-use I Source renewable energy re-source ENGINEERING TOMORROW Danfoss#19Decarbonizing our value chain • Approved science-based targets to reduce value chain emissions by 15% by 2030* Purchased goods and services (914kt) ● Initiatives to reduce scope 3 emissions in progress Continued activities to detail and firm ● up scope 3 baseline *from the 2019 baseline submitted to SBTI 19 Bond Investor Presentation May 2023 Scope 3 Upstream Capital goods Transmission of electricity Upstream transport Waste Business travel Employee commuting Downstream Downstream transport Use of sold products (65,500kt) End-of-life treatment of sold products 66,820kt CO2e (99.4% of scope 1, 2, and 3 2019 baseline) ENGINEERING TOMORROW Danfoss#20We help our customers to decarbonize Through solutions for the most emission heavy industries: buildings, industry, and transport Energy efficiency Sector coupling Electrification of transport 40% of global energy consumption is used to heat and cool buildings 50% of emissions reductions needed to limit global warming to 1.5°C can be achieved by coupling of sectors Transportation accounts for 25% of energy related global greenhouse gas emissions Portfolio of efficient components to increase machine productivity, reduce emissions, lower energy consumption, and enable electrification Data sources: WRI (World Resource Institute), IEA (International Energy Agency) and Navigant Energy Germany GmbH 20 Bond Investor Presentation May 2023 ENGINEERING TOMORROW Danfoss#21Case stories of emissions avoided with Danfoss' solutions 50% less energy used for ventilation and water handling Over 20% energy savings, and maximum food quality Reliance on fossil fuels reduced by 97% Finland's oldest ferry goes all-electric Danfoss' drives reduced energy consumption by up to 50% by controlling ventilation and water pressurization and distribution systems at Carlsberg Group's Okocim Brewery in Brzesko, Poland. Since switching to Danfoss' Optyma™ Plus variable speed condensing unit and expansion valves, Gibson's Farm Shop in the UK is using over 20% less electricity and thereby reducing operating cost and CO2 emissions. The district heating company in Ringsted, Denmark, reduced reliance on fossil fuels by installing Danfoss TurbocorⓇ powered heat pumps to cool flue gas and recover heat from the outside air to redistribute via the district heating network. The Föri - named after the Swedish word for ferry, färja - initially entered service in 1904 as a steam-powered boat in Turku, Finland. Danfoss Editron provided the zero-emission electric drivetrain system. Case stories based on Danfoss' and customers' calculations (not externally verified) 21 Bond Investor Presentation May 2023 ENGINEERING TOMORROW Danfoss#22Agenda Stacy Danfoss in brief Core and green growth opportunities 03 08 Lead in sustainability 15 Financial performance & key highlights 22 5 6 14 7 22 Bond Investor Presentation May 2023 ENGINEERING TOMORROW Danfoss#23• EURM 2021 Margin (%) 2022 Margin (%) Net sales 7,539 10,256 • EBITDA before OOI/E* 1,232 16.3 1,618 15.8 EBITDA 1,272 16.9 1,576 15.4 . EBITA 969 12.8 1,224 11.9 Net profit 631 8.4 683 6.7 Free operating cash flow after 401 5.3 465 4.5 financial items and tax Net interest bearing debt 2,677 3,168 Net interest bearing debt/ EBITDA before OOI/E 2.2x 2.0x *0OI/E: Other Operating Income and Expenses 23 | Bond Investor Presentation May 2023 2022 financial performance Continued strong sales growth • Sales growth of 36% reaching EUR 10.3bn including additional sales from acquired companies Sustained high demand for our solutions and technologies in all three segments, resulting in strong organic growth of 15% for the Group Continued investments ahead of competition into innovation, additional capacity, and digitalization EBITDA grew by 24% YOY leading to Group EBITDA margin of 15.4%; diluted by full-year effect of Eaton hydraulics business and integration cost as well as Semikron and the cyber attack (just before closing, August 2022) Solid free operating cash flow after financial items and tax (before M&A) in 2022 of EUR 465m ENGINEERING TOMORROW Danfoss#24Profitability and cash flow Strong growth while maintaining stable profitability margins, solid cash flow, and declining net-debt ratio Increased earnings... EBITDA before OOI/E (EURM) ...with solid margins and cash flows... Free operating cash flow after financial items and tax (EURM) EBITDA margin before OOI/E (% of net sales) 600 1,800 20.0% 1,600 18.0% 450 1,400 16.0% 1,200 300 150 14.0% 1,000 12.0% 800 0 10.0% 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 ...from strong segment performance... EBITA (EURM) 800 Power Solutions Climate Solutions 600 400 200 18.7% 14.5% Power Electronics and Drives 10.9% EBITA margin (%) 0 2017 2018 2019 2020 2021 2022 24 Bond Investor Presentation May 2023 14.2% 17.4% 10.1% ...driving declining net-debt ratio Net interest-bearing debt / EBITDA before OOI/E 3.0x 2.5x Eaton acquisition 2.0x 1.5x Semikron acquisition 1.0x 0.5x 0.0x 2017 2018 2019 2020 2021 2022 ENGINEERING TOMORROW Danfoss#25Financing and capital structure Maintaining a BBB rating and adequate liquidity are cornerstones of our policy Anticipated maturity profile Debt maturity profile (excl lease liabilities) EURM 800 600 400 200 EIB/NIB/Mortgage EURO Bonds Proposed new notes Bank Term Loans 2023 2024 2025 2026 2027 2028 2029 2030 2031 Later Key area Policy Credit rating Maintain a capital and financing structure over the cycle that is compatible with minimum a BBB credit rating Financial gearing target Liquidity Maturity Shareholder remuneration The target financial gearing is 2 x EBITDA before special items. The ratio may exceed this level following significant acquisitions. Liquidity reserve equal to minimum 7.5% of net sales in terms of accessible cash and undrawn committed credit facilities Average maturity on committed credit facilities above 3 years Danfoss A/S dividend distribution up to 30% of previous year's net profit in addition to minority shareholder distribution Status BBB with stable outlook by S&P (12 May 2023) EUR 2.5bn EMTN programme - BBB rated Net interest-bearing debt / EBITDA before OOI/E at 2.0 (31 December 2022) Liquidity reserve of EUR 1.24bn incl. EUR 240m of cash and cash equivalents at Danfoss A/S (31 December 2022) Above 3 years (31 December 2022) Dividend paid according to policy in 2022 and 2023 25 Bond Investor Presentation May 2023 ENGINEERING TOMORROW Danfoss#26Danfoss' Sustainability-Linked Bond Framework 2030 decarbonization plan Scope 1 and 2 GHG Emission 500 419 404 396 378 400 300 200 100 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Scope 1 and 2 GHG emissions • Danfoss has published our first The framework is aligned with the ICMA Sustainability-Linked Bond Principles ΚΡΙ • 2028 2030 Sustainability-Linked Bond Framework - linked to targets on our decarbonization journey SPTS 26 Bond Investor Presentation May 2023 Reduce absolute scope 1 and 2 GHG emissions by 75% from a 2019 base year Achieve carbon neutral operations (scope 1 & 2), equivalent to a minimum of 90% absolute Scope 1 and 2 emissions reduction • . The SPTs set out constitute a more ambitious pathway compared to the target already validated to be in line with a 1.5°C scenario by the science-based target initiative. This reinforces that Danfoss' climate ambitions are in line with science and the goals of the Paris Agreement. S&P has provided a Second Party Opinion considering Danfoss SPTS to be "Strong" Danfoss will annually report on performance of the KPI against the SPTS, verified by a qualified external reviewer ENGINEERING TOMORROW Danfoss#27Key terms of the proposed Sustainability-Linked Bond Offering Please see the EMTN Programme for complete Terms and Conditions Issuer Guarantor Guarantor Rating Expected Issue Rating Status / Format Currency Expected tenor Expected size Coupon SPTS SLB Premium Amount Denominations Listing Documentation Optional Redemption Governing law Use of Proceeds Joint Bookrunners Sustainability Structuring Advisor Target Market Danfoss Finance II BV (Ticker: DNFSDC / Country: NL) Danfoss A/S BBB (stable outlook) by S&P BBB by S&P Senior Unsecured, Reg S, Bearer EUR [6-7 years] EUR 500m (WNG) Fixed, Annual, Actual/Actual (ICMA) Reduce absolute Scope 1 and 2 GHG emissions by 75% from a 2019 baseline 75 bps payable at maturity following the occurrence of a Sustainability-Linked Trigger Event EUR 100,000+ 1,000 Official List of Luxembourg Stock Exchange (Euro MTF market) EUR 2.5bn EMTN programme; Offering Circular dated 17 May 2023 3-month Par Call, Make Whole Call, Clean-Up Call at Par (80%) English Law General Corporate Purposes BNPP, Danske Bank, JP Morgan, Nykredit Danske Bank Manufacturer target market (MiFID II / UK MiFIR product governance) is eligible counterparties and professional clients only (all distribution channels). No PRIIPS or UK PRIIPs key information document (KID) has been prepared. No sales to retail in the EEA or the United Kingdom 27 Bond Investor Presentation May 2023 ENGINEERING TOMORROW Danfoss#28Key investment highlights Well positioned to capitalize on global megatrends Robust and well-performing business segments with attractive market positions EBITA (EURM) EBITA margin (%) Stable profit margin and strong cash generation over the cycle Free operating cash flow after financial items and tax (EURM) EBITDA before OOI/E margin (%) 600 20.0% 493 463 465 441 450 401 18.0% 359 17.3% 16.0% 300 16.4% 16.3% 15.8% 15.2% 15.8% 14.0% 150 14.2% 17.4% 10.1% 12.0% 0 10.0% 2017 2018 2019 2020 2021 2022 800 Power Solutions Climate change Climate Solutions 600 Power Electronics and Drives 400 200 Electrification 18.7% 14.5% 10.9% 0 2017 2018 2019 2020 2021 2022 Urbanization Prudent financial policy targeting 2XEBITDA and minimum BBB Net interest-bearing debt / EBITDA before OOI/E 3.0x Food & Water Supply 2.0x 1.1x 1.0x 1.0x 1.0x 0.5x Digitalization 28 Bond Investor Presentation May 2023 Current rating 2.2x 2.0x S&P Global Ratings 0.0x 2017 2018 2019 2020 2021 2022 BBB/A-2 with stable outlook ENGINEERING TOMORROW Danfoss#29Danfoss ENGINEERING TOMORROW