ZF Sales Up 8 Percent in 2005

Innovative Products, Upswing in Commercial Vehicle Market and New Facilities in China, Russia and North America Lead to Growth During 2005

FRIEDRICHSHAFEN, Germany, April 28 -- ZF Friedrichshafen AG -- a leading worldwide supplier of driveline and chassis technology totaled $13.5 billion (euro 10.8 billion) in global sales for 2005 -- an increase of 8 percent over 2004. North American sales totaled $2.1 billion.

The increase is attributed to an upswing in the commercial vehicle market, innovative products, and new plant openings in China, Russia and North America. In addition to the commercial vehicle market, key products such as six-speed automatic transmissions, electronic steering systems, and passenger car axle systems and components resulted in above-average sales.

Speaking to reporters in Stuttgart, Germany today, ZF CEO called 2005 a "successful year" for ZF, and said that the company will concentrate on improving its competitive position by increasing flexibility, quality and efficiency in 2006. He also forecasted moderate growth for ZF in 2006.

ZF posted an after-tax profit of $306 million, and invested $652 million in property, plants, and equipment and $683 million in research and development.

The ZF workforce averaged 53,940 worldwide in 2005. This is a 1 percent decrease from the 2004 figure. Within North America, ZF employed 6,100 at 26 locations during 2005.

Expanding International Market Position

Europe currently accounts for more than 70 percent of ZF sales, and will remain the largest market. In the future, ZF is planning to gain a more equal regional balance between Europe, the Americas, and Asia.

ZF strengthened its international market position in 2005 by opening four new facilities in China and Russia, along with a new facility in Newton, N.C., USA, to manufacture control arms. All engineering activities within North America were consolidated at the ZF Group North American Operations Headquarters and Technical Center in Northville, Mich., USA, and a new technical center was established in Shanghai, China.

ZF Divisions Report Significant Increase in 2005 Sales

Sales within the Car Driveline Technology Division increased by 10 percent in 2005 to $2.38 billion (euro 1.92 billion), with six-speed automatic transmissions accounting for 90 percent of the division's total volume. In addition, production of five-speed automatic transmissions for Volkswagen will be launched at the new plant in Shanghai, China this year.

Sales in the Car Chassis Technology Division increased by 18 percent to $2.58 billion (euro 2.075 billion). It was pushed by new series production for components and axle systems in Europe, Asia, and North America. New product lines include front and rear axles for Audi in Changchun, China, control arms in Newton, N.C., USA, and axle corner modules for Land Rover in Birmingham, England.

The ZF Commercial Vehicle and Special Driveline Technology Division increased sales by 9 percent to $2.04 billion (euro 1.647 billion). This was primarily a result of the division's strong market position and a new product offensive. The AS Tronic automatic transmission system for heavy commercial vehicles is now available for mid-size and light-duty trucks. The first AS Tronic mid and AS Tronic lite automatic transmissions for delivery vehicles were delivered in 2005.

The Off-Road Driveline Technology and Axle Systems Division reported a 13- percent increase in sales to $1.75 billion (euro 1.411 billion). This growth was backed by the upswing in construction machinery and commercial vehicle markets. Additional orders for low-floor axle systems were gained in newly developed markets in South America and Russia. Market launches of new four wheel drive passenger cars resulted in sales increases for passenger car axle drive transmissions. The division's success was further enhanced by new products for construction machinery including powershift transmissions for heavy-duty forklift trucks.

Powertrain and Suspension Components Division sales declined slightly by 1 percent to total $2.52 billion (euro 2.028 billion) in 2005. Adjusted to account for the sale of one company in Germany and another in France, the division's revenues increased by 3 percent. The industry demand for dual mass flywheels and self-adjusting clutches exceeded last year's high production figures.

The ZF share of the sales from ZF Lenksysteme GmbH, a joint venture with Robert Bosch GmbH (50%), totaled $1.38 billion (euro 1.114 billion) (up 8 percent). The biggest contributor is the highly successful Servolectric electronic steering system. More than two million units have been manufactured since the series production launch.

Developments in ZF Business Units

The ZF Rubber-Metal Technology unit increased sales by 1 percent to $664 million (euro 535 million). This business unit reinforced its position as a leading supplier of hydraulic chassis bushings with new engineering contracts.

Backed by an increasing global demand for recreational boats and commercial vessels including high-speed ferries, the Marine Propulsion Systems unit increased its sales by 6 percent to $271 million (euro 218 million). Supported by growth in the civilian helicopter market, sales in the Aviation Technology business unit increased by 2 percent to $62 million (euro 50 million).

ZF Aftermarket Trading sales increased by 1 percent to $652 million (euro 525 million). This was partly a result of growth in Eastern Europe and favorable currency exchange rates. The ZF Sales and Service Organization managed to improve its sales by 6 percent to $365 million (euro 294 million). This figure includes $104.2 million (euro 84 million) for product sales and $261 million (euro 210 million) for after-sales activities.

Outlook for 2006

Challenges for ZF during 2006 include cost pressures and price increases on sales and procurement markets. In light of continuing globalization, new competitive structures, the market's growing technological demands and cautious economic forecasts -- particularly in Europe -- moderate growth is expected.

Sales of driveline and chassis products for cars and commercial vehicles are expected to remain stable at a high level. Without an economic upswing, growth is only possible by adding new products and new markets, like Asia and Eastern Europe -- where ZF plans to expand. New products including hybrid components, modules, and systems are expected to gain importance and generate new business.

ZF 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 around 54,000 employees at 122 locations in 26 countries, and totaled sales of $13.5 billion in 2005. 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 Headquarters and Technical Center is located in Northville, Mich., USA.

For additional information, please visit: http://www.zf.com/presscenter