(FRIEDRICHSHAFEN, Germany) — ZF Friedrichshafen AG will increase its research and development spending again and work even faster to produce technologies for the future of mobility, according to CEO Wolf-Henning Scheider, who has been in office since Feb. 1.
ZF ended the fiscal year 2017 with record sales of €36.4 billion ($44.9 million USD), which, when adjusted for exchange rate effects and M&A activities, elicited organic growth of 6 percent.
“The world of mobility is spinning at high speed,” said Scheider. “We plan to provide our customers with pioneering solutions in all fields under our motto ‘See – Think – Act’, which is why we will further increase our research and development spending.”
In 2017, ZF spent €2.2 billion on research and development, an increase of almost 15 percent compared to 2016. This year, significantly more than two billion is set to be channeled into development work around the world, with the aim of advancing electric drives and the hybridization of transmission technology as well as vehicle safety systems and automated driving. This means that the share of the budget allocated to R&D will be raised from 6.1 percent to around 6.5 percent this year.
Sales increase by six percent
In 2017, ZF experienced a nominal increase of 3.6 percent to €36.4 billion in Group sales (2016: €35.2 billion). Adjusted for exchange rate effects and M&A activities, organic sales growth is six percent.
Regional growth was mixed. In both Europe and North America, sales rose by over three percent. Organic growth of eight percent in the Asia-Pacific region was reduced to around two percent by the negative currency effect of the Chinese Renminbi. It appears that the economic crisis in South America has, to a large extent, been overcome. Sales there increased significantly by around 26 percent, coming from a low level.
The headcount for the ZF Group was 146,148 on the effective date, December 31, 2017 (2016: 136,820). Additional posts were created mainly in China, Mexico, Portugal, the USA and Germany.
Prospects for 2018
Market development is volatile around the world. Taking this into consideration, ZF CEO Scheider predicts organic growth of around five percent for 2018. ZF expects to conclude the sale of the Body Control Systems Business Unit to Luxshare soon, which will result in a proportional drop in sales. Consequently, ZF expects Group sales of around €36.5 billion. As in the previous year, ZF is aiming to achieve an adjusted EBIT of around six percent and an adjusted free cash flow of over one billion euros.