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ZF 2019 financial results: New orders and high investments ready ZF to face a difficult market environmentFRIEDRICHSHAFEN, Germany, March 26, 2020 /PRNewswire/ -- In a challenging environment, ZF Friedrichshafen AG has achieved its targets for the full year which were revised in summer 2019. At €36.5 billion, Group sales – adjusted for currency and M&A effects – were slightly below the previous year's figure of €36.9 billion (organically minus 1.9 percent). Adjusted EBIT amounted to €1.5 billion (2018: €2.1 billion) and adjusted EBIT margin was 4.1 percent (2018: 5.6 percent). At the end of December, ZF had 147,797 employees worldwide (2018: 148,969). As well its immediate priorities to deal with the consequences of the coronavirus, ZF is following its long-term goals of its "Next Generation Mobility" strategy to shape mobility needs of the future. "At present, we are witnessing how the markets are collapsing overnight," said ZF CEO Wolf-Henning Scheider on Thursday in Friedrichshafen. "At ZF, we have reacted quickly and decisively to the spread of the coronavirus and have prioritized the health and interests of our employees in line with those of the company in the best way possible. Our aim is to pursue our ZF way by securing employment and income wherever the appropriate tools are available. In doing so, we are acting in a socially responsible way and contributing to protecting the health of our employees. Furthermore, we can help to stabilize the economic situation which is volatile for all companies currently." Scheider emphasized that ZF stays confident even in this serious situation and is preparing to ramp up the plants in Europe and the U.S. after customers resume production. In Asia, production has already been resumed. "We will continue to stand by our customers and suppliers as a reliable business partner – and support them when they need us," said Scheider. 2019 key figures characterized by higher spending and market weaknesses Adjusted EBIT amounted to €1.5 billion (2018: €2.1 billion); the adjusted EBIT margin declined to 4.1 (2018: 5.6) percent. Earnings were affected by higher research and development (R&D) expenditure and setting up new sites for future technologies – such as production facilities for electric drives in Germany, Serbia and China. In addition, the economic downturn in the automotive industry is reflected in the result. Free cash flow adjusted for M&A amounted to €803 million (2018: €891 million). ZF has reacted consistently to the weaker markets, reviewed and postponed investments, and agreed closing days at several locations – purely through operational flexibility instruments. "We were able to adjust our cost structure to the changed market situation," said ZF CFO Dr. Konstantin Sauer. "This allowed ZF's results to remain within the forecasted range that was revised mid-2019. However, these figures do not meet our long-term strategic goals. We therefore continue working on our cost structure in order to achieve further improvements." The increased digitalization of business processes should also contribute to this. Investments in property, plant and equipment amounted to €1.9 billion (2018: €1.6 billion). At 5.2 percent, the investment ratio was significantly higher than in 2018 (4.3 percent). As CFO Sauer further explained, financing the planned acquisition of the commercial vehicle brake manufacturer Wabco was a success. To this end, ZF placed bonds and bonded loans totalling €4.8 billion on the capital market last October. "Many more investors wanted to subscribe than we offered for this financing," said Sauer. "This shows that the financial market sees and supports the potential of this acquisition." More money for research and development – new partnerships In addition to ZF's own resources, participations and partnerships play a decisive role in the company's R&D – especially in automated driving. These include, for example, the acquisition of a 60-percent majority stake in the Dutch company 2getthere, an established supplier of autonomous electric passenger transport systems, and the recently agreed cooperation with Microsoft to improve development processes and significantly ramp up ZF's software capabilities. "This is important for our customers who require flexible cooperation and short delivery times for software updates," explained Scheider. "In addition, we will be able to develop software even if the hardware is not yet available. ZF will also offer software solutions as individual products in the automotive market." Number of employees slightly below pre-year figure Climate neutrality targeted by 2040 2020 business outlook Key figures at a glance
ZF Friedrichshafen AG In 2019, ZF achieved sales of €36.5 billion. The company has a global workforce of 148,000 with approximately 240 locations in 41 countries. ZF invested seven percent of its sales in research and development. For further press information and photos please visit: www.zf.com View original content:http://www.prnewswire.com/news-releases/zf-2019-financial-results-new-orders-and-high-investments-ready-zf-to-face-a-difficult-market-environment-301029765.html SOURCE ZF |