OCTOBER 31, 2007

SAUER-DANFOSS INC. REPORTS THIRD QUARTER 2007 RESULTS

• Record Sales Continue, Driven by Strong European Demand

• Third Quarter Earnings from Operations Improved by 40%

• New Orders and Backlog Remain Strong

CHICAGO, Illinois, USA, October 31, 2007—Sauer-Danfoss Inc. (NYSE: SHS) today announced net sales rose 18 percent to $451.8 million for the third quarter ended September 30, 2007, compared to net sales of $381.9 million for the third quarter 2006. Net income for the quarter was $5.5 million, or $0.11 per share, compared to net income of $7.1 million, or $0.15 per share for the third quarter 2006.

Strong Operational Growth

David Anderson, President and Chief Executive Officer, stated, “We were pleased that we continued to grow revenues significantly and while several factors, including an uncommonly high tax rate, impacted net income in the quarter, our operating income improved 40 percent over the previous year’s period. Our operational strength is evidence that our strategy of investing in future profitable growth and increasing capacity to meet the high demand is producing meaningful results. The increase in operating income was largely due to a margin improvement of 2.7 percentage points in our Propel segment to 11.8 percent. This increase was driven by particularly strong demand in Europe during the holiday months of July and August. Our Work Function and Controls segments are starting to make progress; however, we continue to experience margin pressures as a result of the continued strong European currencies and capacity constraints. We are on track with the restructuring and SAP implementation initiatives and these costs are declining quarter to quarter which is in line with our expectations.”

Third quarter 2007 earnings were negatively impacted by an unusually high income tax rate of 60 percent compared to last year’s unusually low rate of 18 percent. The impact between the comparable quarters was $4.9 million, or $0.10 per share. The increase in third quarter 2007 taxes was the result of an increase in deferred tax expense in Germany due to a legislative statutory tax rate change impacting deferred tax assets. The lower 2006 tax resulted from income tax

Executive Offices: 250 Parkway Drive, Suite 270, Lincolnshire, IL 60069

Krokamp 35, 24539 Neumünster, Germany

NINE MONTH RESULTS

Net sales for the nine months ended September 30, 2007, were $1,478.4 million, an increase of 11 percent compared to $1,335.7 million for the first nine months of 2006. On a comparable basis, excluding the impact of currency translation rate changes and divestitures, net sales were up 8 percent over last year.

Net income for the first nine months of 2007 was $38.5 million, or $0.80 per share, compared to net income for the same period last year of $55.8 million, or $1.16 per share. Earnings for 2007 were negatively impacted by plant restructuring costs of $17.8 million pre-tax, or $0.31 per share, compared to costs of $10.3 million pre-tax, or $0.14 per share, for 2006. Implementation costs of the common business system platform were $8.8 million pre-tax, or $0.12 per share, in 2007, compared to costs of $10.5 million pre-tax, or $0.14 per share, for 2006. Prior year results also include income tax benefits of $6.0 million, or $0.13 per share, related primarily to prior years’ foreign tax credits not able to be previously recognized.

Strong Cash Flow, Continued Investments for Capacity in Europe

Cash flow from operations for the first nine months of 2007 was $99.0 million, down from the record $154.0 million for the same period last year. Capital expenditures for the nine-month period were $83.0 million, up from $65.2 million for the comparable period in 2006. Debt to total capital ratio, or leverage ratio, was 40 percent at the end of the third quarter, level with prior quarter and the end of last year.

2007 Outlook

“We reaffirm our earnings per share expectations for the full year 2007 of $0.95 to $1.05, after deducting restructuring costs,” Anderson continued. “We are updating our restructuring cost to $0.32 to $0.33 per share from the previous expectation of $0.28 to $0.29. With the continued strong sales in Europe, and the pick-up in the U.S., we are increasing our outlook for sales growth to 10 percent to 12 percent, up from 8 percent to 9 percent. Capital expenditures expectations for 2007 will be approximately 6 percent to 7 percent of sales.”

Webcast Information

Members of Sauer-Danfoss’ management team will host a Webcast on November 1, 2007, at 10 AM Eastern Time to discuss third quarter 2007 results. The call is open to all interested parties on listen-only mode via an audio webcast and can be accessed through the Investor Relations page of the Company’s website at http://ir.sauer-danfoss.com. A replay of the call will be available at that site through December 1, 2007.

About Sauer-Danfoss

Sauer-Danfoss Inc. is a worldwide leader in the design, manufacture, and sale of engineered hydraulic, electric and electronic systems and components, for use primarily in applications of mobile equipment. Sauer-Danfoss, with approximately 9,000 employees worldwide and revenue of more than $1.7 billion, has sales, manufacturing, and engineering capabilities in Europe, the Americas, and the Asia-Pacific region. The Company’s executive offices are located near Chicago in Lincolnshire, Illinois and in Neumünster, Germany. More details online at www.sauer-danfoss.com.

This press release contains certain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. All statements regarding future performance, growth, sales and earnings projections, conditions or developments are forward-looking statements. Words such as “anticipates,” “in the opinion,” “believes,” “intends,” “expects,” “may,” “will,” “should,” “could,” “plans,” “forecasts,” “estimates,” “predicts,” “projects,” “potential,” “continue,” and similar expressions may be intended to identify forward-looking statements.

Actual future results may differ materially from those described in the forward-looking statements due to a variety of factors. It is difficult to determine if past experience is a good guide to the future. While the economy in the U.S. remains unstable due to the uncertainty surrounding continued job creation, interest rates, crude oil prices, and the U.S. government’s stance on the weaker dollar, the economic situation in Europe has been improving in recent months. Any downturn in the Company’s business segments could adversely affect the Company’s revenues and results of operations. Other factors affecting forward-looking statements include, but are not limited to, the following: specific economic conditions in the

agriculture, construction, road building, turf care, material handling and specialty vehicle markets and the impact of such conditions on the Company’s customers in such markets; the cyclical nature of some of the Company’s businesses; the ability of the Company to win new programs and maintain existing programs with its original equipment manufacturer (OEM) customers; the highly competitive nature of the markets for the Company’s products as well as pricing pressures that may result from such competitive conditions; the continued operation and viability of the Company’s significant customers; the Company’s execution of internal performance plans; difficulties or delays in manufacturing; cost-reduction and productivity efforts; competing technologies and difficulties entering new markets, both domestic and foreign; changes in the Company’s product mix; future levels of indebtedness and capital spending; claims, including, without limitation, warranty claims, field retrofit claims, product liability claims, charges or dispute resolutions; ability of suppliers to provide materials as needed and the Company’s ability to recover any price increases for materials in product pricing; the Company’s ability to attract and retain key technical and other personnel; labor relations; the failure of customers to make timely payment; any inadequacy of the Company’s intellectual property protection or the potential for third-party claims of infringement; global economic factors, including currency exchange rates; general economic conditions, including interest rates, the rate of inflation, and commercial and consumer confidence; energy prices; governmental laws and regulations affecting operations, including tax obligations; changes in accounting standards; worldwide political stability; the effects of terrorist activities and resulting political or economic instability; natural catastrophes; U.S. military action overseas; and the effect of acquisitions, divestitures, restructurings, product withdrawals, and other unusual events.

The Company cautions the reader that these lists of cautionary statements and risk factors may not be exhaustive. The Company expressly disclaims any obligation or undertaking to release publicly any updates or changes to these forward-looking statements that may be made to reflect any future events or circumstances. The foregoing risks and uncertainties are further described in Item 1A (Risk Factors) in the Company’s latest annual report on Form 10-K filed with the SEC, which should be reviewed in considering the forward-looking statements contained in this press release.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended				Nine Months Ended
(Dollars in thousands	September 30,		September 30,		September 30,		September 30,
except per share data)	2007		2006		2007		2006
Net sales	451,771		381,895		1,478,376		1,335,710
Cost of sales	357,550		299,395		1,147,275		1,018,763
Gross profit	94,221		82,500		331,101		316,947
Research and development	16,492		15,647		50,538		45,659
Selling, general and administrative	54,926		50,988		177,122		163,007
Loss on sale of business	662		—		8,702		—
Total operating expenses	72,080		66,635		236,362		208,666
Income from operations	22,141		15,865		94,739		108,281
Nonoperating expenses:
Interest expense, net	(5,600	)	(4,293	)	(16,720	)	(13,323	)
Minority interest in income of consolidated companies	(869	)	(1,949	)	(15,512	)	(18,094	)
Other, net	(2,029	)	(1,009	)	(3,449	)	(3,572	)
Income before income taxes	13,643		8,614		59,058		73,292
Income taxes	(8,144	)	(1,536	)	(20,557	)	(17,486	)
Net income	5,499		7,078		38,501		55,806
Net income per share:
Basic net income per common share	0.11		0.15		0.80		1.17
Diluted net income per common share	0.11		0.15		0.80		1.16
Weighted average shares outstanding
Basic	48,099		47,706		48,093		47,698
Diluted	48,275		48,439		48,271		48,147
Cash dividends declared per common share	0.18		0.16		0.54		0.44

BUSINESS SEGMENT INFORMATION

	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
(Dollars in thousands)	2007		2006		2007		2006
Net sales
Propel	207,637		166,627		707,366		655,435
Work Function	124,479		113,178		399,343		359,292
Controls	119,655		102,090		371,667		320,983
Total	451,771		381,895		1,478,376		1,335,710
Segment Income (Loss)
Propel	24,530		15,156		111,237		94,583
Work Function	880		6,311		2,254		18,233
Controls	6,837		8,657		16,737		37,851
Global Services and Other Expenses, net	(12,135	)	(15,268	)	(38,938	)	(45,958	)
Total	20,112		14,856		91,290		104,709

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended
	September 30,		September 30,
(Dollars in thousands)	2007		2006
Cash flows from operating activities:
Net income	38,501		55,806
Depreciation and amortization	75,193		67,711
Minority interest in income of consolidated companies	15,512		18,094
Net change in receivables, inventories, and payables	(44,026	)	(19,130	)
Other, net	13,822		31,555
Net cash provided by operating activities	99,002		154,036
Cash flows from investing activities:
Purchases of property, plant and equipment	(83,036	)	(65,209	)
Proceeds from sales of property, plant and equipment	5,111		4,382
Proceeds from sales of businesses	7,006		—
Net cash used in investing activities	(70,919	)	(60,827	)
Cash flows from financing activities:
Net borrowings on notes payable and debt instruments	5,745		(56,743	)
Cash dividends	(24,968	)	(19,066	)
Distribution to minority interest partners	(7,987	)	(5,984	)
Net cash used in financing activities	(27,210	)	(81,793	)
Effect of exchange rate changes	750		(693	)
Net increase in cash and cash equivalents	1,623		10,723
Cash and cash equivalents at beginning of year	29,112		14,194
Cash and cash equivalents at end of period	30,735		24,917

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,		December 31,
(Dollars in thousands)	2007		2006
ASSETS
Current assets:
Cash and cash equivalents	30,735		29,112
Accounts receivable, net	314,247		259,976
Inventories	282,764		272,286
Other current assets	53,701		43,931
Total current assets	681,447		605,305
Property, plant and equipment, net	529,363		503,977
Other assets	203,945		199,873
Total assets	1,414,755		1,309,155

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and bank overdrafts	59,147		46,952
Long-term debt due within one year	131,680		120,243
Accounts payable	153,435		142,234
Other accrued liabilities	145,302		128,533
Total current liabilities	489,564		437,962
Long-term debt	182,379		182,388
Long-term pension liability	83,012		80,607
Deferred income taxes	30,304		30,590
Other liabilities	62,446		58,169
Minority interest in net assets of consolidated companies	62,069		53,448
Stockholders’ equity	504,981		465,991
Total liabilities and stockholders’ equity	1,414,755		1,309,155

Number of employees at end of period	9,360		9,178
Debt to total capital ratio (1)	40	%	40	%

(1) The debt to total capital ratio is calculated by dividing total interest bearing debt by total capital. Total interest bearing debt is the sum of notes payable and bank overdrafts, long-term debt due within one year, and long-term debt. Total capital is the sum of total interest bearing debt, minority interest in net assets of consolidated companies, and stockholders’ equity.

Kenneth D. McCuskey	Sauer-Danfoss Inc.	Phone:	(515) 239-6364
Vice President and	2800 East 13th Street	Fax:	(515) 956-5364
Chief Accounting Officer	Ames, Iowa, USA, 50010	kmccuskey@sauer-danfoss.com

John N. Langrick	Sauer-Danfoss Inc.	Phone:	+49-4321-871-190
Director of Finance Europe	Krokamp 35	Fax:	+49-4321-871-121
	24539 Neumünster, Germany	jlangrick@sauer-danfoss.com