Global technology and component major ZF Friedrichshafen AG is bullish on growth in 2017. The company closed 2016 fiscal year with a rise in profits and a strong improvement in cash flow.

For 2017, ZF expects Group sales of roughly €36 billion, an adjusted EBIT margin of more than 6 percent as well as an adjusted EBITDA margin of over 10 percent. With an adjusted free cash flow of significantly more than €1 billion, ZF will over the current year continue to reduce its debt and invest in the future. “Starting from this position of strength and financial stability, we can afford to invest heavily in future-oriented technology. This will secure jobs for our employees over the long term,” said CEO Dr. Stefan Sommer.

In 2016 Group sales rose by 20.6 percent to €35.2 billion. The adjusted EBIT margin climbed up one percentage point to 6.4 percent and the adjusted free cash flow totaled €2 billion. From this strong financial position, ZF reduced its debt from the TRW acquisition by €1.6 billion while increasing spending on research and development to €2 billion.

“ZF flexed its muscles in 2016 with outstanding business figures and innovative products,” said CEO Dr. Stefan Sommer, describing the fiscal year just ended. “This strength gives us a solid foundation to help shape the challenging transformation in the automotive industry through digitalization, electromobility and autonomous driving.”

After the TRW acquisition in mid-May 2015, sales from the resulting new Active & Passive Safety Technology Division for reporting year 2016 were included for the first time in the ZF Group Sales for the whole year. This helped reported sales to rise by 20.6 percent to €35.2 billion. Compared to the pro-forma figures of the previous year, including the TRW sales for all of 2015, sales rose by 2.2 percent. Organic growth without exchange rate effects as well as buying and selling activities was 4.2 percent.

ZF’s automotive sales increased moderately in 2016, especially for automatic passenger car transmissions and safety technology. Sales posted by the Industrial Technology Division rose 16.7 percent compared to 2015. This was due in particular to the acquisition of the wind turbine gearbox and industrial drives segments from Bosch-Rexroth as well as significantly higher sales in the Wind Power Business Unit. As a result of this dynamic development, the share of Industrial Technology in total Group sales rose to eight percent. That is consistent with the objectives of the ZF 2025 Strategy for greater diversification of ZF business activities.

“ZF is grasping the opportunity of fundamental change in the automotive industry to transform into a leading technology company in e-mobility and autonomous driving,” said CEO Dr. Stefan Sommer. ZF is counting on a combination of mechanical and electronic systems. “The car of the future will still rely on mechanical components. Even an ‘iPhone on wheels’ needs brakes, a steering system, axles and the rest,” says Dr. Stefan Sommer. “Our strength is our combination of hardware and software. So we produce intelligent mechanical systems.”