ZF Sales Decline Slightly in 2008
FRIEDRICHSHAFEN, Germany, April 29 -- After three consecutive years of above-average growth of around 8 percent, ZF Friedrichshafen AG reported sales of $16.3 billion (euro 12.5 billion) in 2008 - a decline of about 1 percent. Following largely positive developments in the first nine months of the year, the car, truck and construction machinery markets declined significantly in the last quarter. After-tax profits reached $567 million (euro 434 million), the second highest earnings in the history of the company. The equity ratio rose to 42 percent.
"Every crisis always also offers opportunities," said Hans-Georg Haerter, CEO of ZF Friedrichshafen AG. "A solid financial structure and outstanding technological expertise with energy-saving products will help ZF safely navigate through the current crisis.
"ZF is focusing intensively on an environmentally friendly product portfolio. Innovations such as the new eight-speed automatic transmission, which will enter series production in 2009, significantly reduce fuel consumption and CO2 emissions. We are experiencing great demand for these technologies, not only in the premium segment, but also in other vehicle classes," Haerter added.
Another example is the electric power steering from ZF Lenksysteme that can be adapted to any model platform. More than eight million units of this intelligent steering system are in the market in vehicles like the BMW 3 Series, Audi A3 and new Volkswagen Golf - saving more than 63 million gallons of fuel per year. With the opening of the first European production plant for hybrid modules in Schweinfurt, Germany, in 2008, ZF has again paved the way toward significantly reducing fuel consumption and exhaust emissions.
Economic factors affect sales
The 2008 fiscal year transpired in two widely divergent phases. During the first three quarters, ZF divisions posted above-average sales, while the fourth quarter saw all regions and markets hit simultaneously by the economic downturn. Production volume reductions in the automotive segment resulted in a difficult final quarter.
Despite the downturn, sales in the Asia-Pacific region were up 13 percent, while South America saw an increase of 19 percent. Sales declined in Europe by 5 percent and in North America by 2 percent.
ZF divisions posted the following results: -- Car Driveline Technology: $2.63 billion - 3 percent decline, due to reduced customer volumes and investment in future programs -- Car Chassis Technology: $2.55 billion - 15 percent decline, due to reduced customer volumes -- Commercial Vehicle and Special Driveline Technology: $2.92 billion - 7 percent increase, due to robust trucking economies in Brazil, Russia and China; advances in bus technology contributed, as well -- Off-Road Driveline Technology and Axle Systems: $2.55 billion - 4 percent increase, due to dynamic growth during the first half of 2008 and increased demand for low-floor bus axles -- Powertrain and Suspension Components: $3.12 billion - no change from 2007 -- ZF Lenksysteme GmbH (Steering): $1.69 billion - 1 percent decline, due to reduced customer volumes ZF business units posted the following results: -- Rubber-Metal Technology: $639 million - 6 percent decline -- Marine Propulsion Systems: $371 million - 8 percent increase -- Aviation Technology: $93 million - 18 percent increase -- ZF Services: $1.32 billion - 5 percent increase -- Electronic Components: $42 million - acquired in November 2008 Retaining the core workforce
Late in 2008, ZF integrated Cherry Corporation to form ZF Electronics GmbH, increasing the worldwide workforce to nearly 64,000 - an increase of 8 percent over 2007. Due to the difficult sales situation and necessary adjustments, ZF is taking all measures possible to retain employees.
Solid financial foundation
ZF consistently invests its earnings in the future. During 2008, the company invested 5 percent of overall sales - $910 million - into research and development. In preparation for series production of new product generations and the expansion of the international research and development network, ZF invested a record sum of $1.2 billion in 2008.
ZF posted an after-tax profit of $567 million during 2008 and increased its equity ratio from 20 percent in 2003 to more than 42 percent in 2008. More importantly, the company retains a cash-positive position heading into 2009.
The world economic crisis will lead to a decline in business for ZF in 2009, with a significant reduction in sales and earnings.
"Nevertheless, ZF is a solidly financed company with outstanding technological expertise and a worldwide presence, and it can look to the future with confidence," Haerter said. "This approach allows the company to secure its long-term independence."