STUTTGART/FRIEDRICHSHAFEN, Germany – ZF Friedrichshafen AG reports that it closed 2014 with sales growth of nine percent. The technology company generated sales of EUR 18.4 billion and says it improved profitability, with earnings before interest and taxes (EBIT) rising more than one-third, to about EUR 1.1 billion.
ZF’s CEO Dr. Stefan Sommer thus confirmed last year’s forecast of sales growth in the high single-digit percent range. “2014 was again characterized by heterogeneous market trends,” said Sommer on Tuesday during his presentation of annual financial statements in Stuttgart. “It is all the more gratifying that we reached our goal. Our employees contributed to this success with their extraordinary commitment.”
Sommer said the main growth driver was business with automatic passenger car transmissions and axle systems. “The 8-speed automatic transmission, whose second generation we launched last year, has been especially popular among customers,” added Sommer. The market for commercial vehicles and off-road machinery, however, turned out to be more difficult, he noted.
Growth Drivers: North America and Asia-Pacific
ZF said the regions of North America (EUR 3.7 billion) and Asia-Pacific (EUR 3.6 billion) were top contributors to the company’s record sales of EUR 18.4 billion, with each region increasing sales by 21 percent. In Europe, where ZF generated about 56 percent of sales, the company pulled in sales of EUR 10.3 billion, an increase of five percent compared to 2013. In comparison, market developments in South America were quite different, with sales dropping by approximately one-fifth due to the floundering economic situation.
As a result of the strong demand for ZF products, the company says it invested about EUR 1 billion in property, plants and equipment last year; an amount that considerably exceeds depreciation. “Our customers require our presence on-site, and the company itself is continuously expanding its production and research network,” explained Sommer. The Engineering Center in Shanghai, for instance, is being expanded on a massive scale; a new test center for transmissions is being built in Friedrichshafen, the headquarters of Corporate Research and Development at the ZF Group.
R&D further expanded
ZF spent EUR 891 million on research and development (R&D) in 2014, seven percent more compared to the previous year, reaching its target figure of five percent of sales for R&D. With more than 860 patent applications, the company was again ranked among the top 10 innovators in Germany.
3,200 new jobs created
At the end of 2014, the ZF Group had a global workforce of 71,402 employees, 41,188 in Germany. The Group created almost 3,200 additional jobs worldwide – an increase of five percent. By selling the company’s rubber & plastics business unit and the South African subsidiary AIBC, the total number of employees dropped by approximately 4,400. In contrast, the sale of the 50-percent stake in the former ZF Lenksysteme GmbH to Robert Bosch GmbH did not impact the ZF Group’s sales or workforce figures due to the IFRS accounting rules. This transaction was concluded on Jan. 30, 2015.
Acquisition of TRW most important milestone in 2014
“ZF set an important strategic course in 2014,” said Sommer. “Important steps along the way included the founding of two new joint ventures in China: one with automotive manufacturer BAIC in the passenger car chassis sector and the other one with tractor manufacturer YTO in the agricultural machinery sector. The most important step, however, was, of course, the agreement to acquire TRW Automotive, which will help us considerably expand our expertise as a systems supplier. As a result, customers of ZF and TRW will have access to a broad product portfolio from a single source that will offer future mobility solutions in both driveline and chassis technology as well as safety and assistance systems.”