Source: ZF announcement
FRIEDRICHSHAFEN, Germany – With global vehicle markets slowly recovering, ZF is ramping up its production capacities and expects a positive adjusted EBIT for the full year.
In the first half of 2020, the company generated sales of €13.5 (2019: €18.4) billion under difficult conditions. Sales compared to the same period last year were down 27 percent. Thanks to quickly initiated and effective measures to adjust expenses and costs, adjusted EBIT was maintained at minus €177 million. In the second half of the year, ZF will focus on adapting the company to the new economic and technological conditions and strengthening its financial independence.
“Together with all ZF employees worldwide, we effectively adjusted our costs in March and reduced them by more than one billion euros in the first half of the year,” said ZF CEO Wolf-Henning Scheider, addressing the figures for the first half of the year. “In the second half of the year we will now ramp up production everywhere, return to positive operational performance and realign structures and capacities for the long term.
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“We will strictly keep to our course, continue to limit expenses, adjust personnel capacities to sales levels and invest very selectively. If there is no major Covid-19 wave in the next few months and the market level in the second half of the year is in the range of minus 10 to minus 15 percent below the previous year’s level as we anticipated, then ZF can – even in this extraordinary period – achieve a positive adjusted EBIT at the end of the year.”
ZF’s expected annual profit will nevertheless be negative.
Second half year outlook
ZF expects the market environment to remain very heterogeneous in the second half of the year.
“Although Europe is showing signs of recovery at the moment, it will likely be the most critical region in the next few years due to declining vehicle exports and stricter emissions regulations,” said Scheider. Due to the high number of Covid-19 infections currently, development in the Americas is also very uncertain. “China and Asia are currently the most promising markets. Business in this region is coming back very strongly and is helping us to increase our sales again.”
Overall, the global economic situation remains tense. ZF does not expect the market to recover to 2019 levels in the next three years.
“This applies to passenger cars and light commercial vehicles up to a weight of six tons, although our forecasts for passenger cars with 88.5 million units in 2023 are still far from the approximately 94 million units of 2018,” explained Scheider. With heavy commercial vehicles, the upswing looks to be slower: in 2023, expected sales of 3.2 million heavy trucks will be 360,000 vehicles below the 2019 figure (3.56 million).
In view of the slow recovery, ZF is taking actions to adapt the company to the new circumstances to achieve a sustained improvement in earnings. Scheider emphasized: “This is crucial to continue investing in future technologies such as e-mobility and autonomous driving, to win business and to further strengthen our financial independence for the future.”
To read the entire announcement, click HERE.