ZF posts improved first half figures, despite increase R&D spend

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ZF Friedrichshafen AG has announced that it has further increased its sales and profit margin during the first six months of 2017. Sales rose to €18.3 billion (US$21.7bn) with the adjusted operating profit (EBIT) increasing to €1.2 billion (US$1.4bn). ZF thus posted an improved adjusted EBIT margin of 6.6% despite an increase in research and development investments. At the same time, ZF was able to reduce its debt load, which was a result of the TRW acquisition, by roughly €684 million (US$813m).

“ZF has invested heavily in the future during the first half of the year – we are quickly ramping up our efforts when it comes to electromobility and autonomous driving,” explained ZF’s chief executive officer, Dr. Stefan Sommer. “Our improved margin and a solid cash flow are helping us to achieve this, as well as several new cooperative partnerships which we are using to complete our technology portfolio.”

In the first six months of 2017, ZF generated sales totaling €18.3bn. This is an increase of €481m or 2.7% over the first six months of last year. Excluding exchange rate effects and with adjustment for the buying and selling of company shares, the organic growth rate was three percent.

The adjusted operating profit (EBIT) reached €1.2bn (2016: €1.1bn) in the first six months of 2017 and is the equivalent of an adjusted EBIT margin of 6.6% (2016: 6.3%).

“Despite investing more in research and development as well as electromobility and autonomous driving, we were able to further improve our margin,” added chief financial officer Dr. Konstantin Sauer. “We were able to achieve this by boosting operating performance and realizing synergies

resulting from the acquisition of TRW.”

The adjusted earnings before interest, taxes and depreciation and amortization (EBITDA) came to €2.0bn (2016: €1.9 bn), which is the equivalent of an EBITDA margin of 10.8% (2016: 10.7%).

The operative free cash flow, adjusted for buying and selling of company shares, stood at €322m (2016: €401m), which contributed to further reducing the debt – which resulted from the TRW acquisition – by €684m to €7.6 bn. In the meantime, the equity ratio rose by two percentage points to 23%. ZF predicts that business will remain stable throughout 2017.

“We continue to expect an adjusted EBIT margin of more than six percent and an adjusted EBITDA margin of over ten percent,” concluded Sauer. “2017 sales will exceed €36bn (US$42bn) from today’s perspective.”

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Dean has been with UKi Media & Events for over a decade, having previously cut his journalistic teeth writing and editing for various automotive and engineering titles. He combines extensive knowledge of all things automotive with a passion for driving, and experience testing countless new vehicles, engines and technologies around the world. As well as his role as editor-in-chief across a range of UKi's media titles, he is also co-chair of the judging panel of the International Engine of the Year Awards.

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