ZF Announces 2003 Global Sales Results

FRIEDRICHSHAFEN, Germany, April 28 -- ZF Friedrichshafen AG worldwide sales totaled $10.5 billion (euro 8.9 billion) in 2003. This is a slight decline compared to 2002 figures of $10.9 billion (euro 9.2 billion). North American sales totaled $1.8 billion (euro 1.5 billion), down from $2.4 billion (euro 2 billion) in 2002.

The key change in sales is related to the restructuring of ZF Batavia -- the joint venture between Ford and ZF. ZF Batavia sales are no longer reflected in ZF worldwide figures.

Despite adverse market conditions and the strong euro, ZF achieved real growth of 2 percent, compared with 2002. In 2004, ZF will continue to invest in new products and markets with a focus on Asia and Eastern Europe. Sales are expected to increase by around 5 percent in 2004.

ZF CEO Dr. Siegfried Goll announced at a press conference held today in Stuttgart, Germany, that several factors contributed to the 2003 results.

"The restructuring of joint ventures resulted in significant one-time expenses. Weak demand in the sector, the unfavorable exchange rates due to the strong euro, and a continuation of the previous year's high investments in new-generation products, technologies, and facilities placed an additional burden on the financial results. At the same time, suppliers have experienced increased pricing pressure," Dr. Goll said.

A group-wide cost cutting and restructuring program launched in 2003 and the added potential gained through the integration of ZF Sachs will contribute to a sustainable improvement in earnings beginning in 2004. According to Dr. Goll, "The above-average rate of investment in property, plant, and equipment, and the investments in research and development will be reduced to normal industry levels in the future."

In North America, ZF employs 6,000 and is currently expanding facilities in Northville, Mich. at the North American Technical Center; Lapeer, Mich.; and Tuscaloosa, Ala.; and is building a new suspension components plant in Newton, N.C.

Outlook for 2004

ZF anticipates more dynamic growth in 2004. The company is looking forward to additional momentum fueled by new project investment during the past few years. If economic conditions and exchange rates develop favorably, ZF estimates a sales increase of around 5 percent in 2004 with an employment increase to around 54,500.

ZF Friedrichshafen AG is a leading worldwide supplier of driveline and chassis technology. Headquartered in Friedrichshafen, Germany, ZF is among the 15 largest automotive suppliers in the world. The company has a total workforce of 53,500 at 119 locations in 25 countries, and combined revenues for the group totaled more than $10 billion in 2003.

ZF operates a large manufacturing network in North America, combined with global research and development capabilities, to provide advanced technology to the region. The ZF Group North American Operations Technical Center is located in Northville, Michigan.

For complete release text, or additional information, please visit: www.zf.com/presscenter