ZF meets 2021 sales and earnings targets
ZF achieved its financial targets in 2021 and continued its strategic orientation, focused on the future of mobility, securing substantial new customer contracts in the three core areas of electric mobility, autonomous driving and software development.
For the full year, ZF generated Group sales totaling €38.3 billion (2020: €32.6 billion), marking an increase of 17.5 percent year-on-year. The adjusted EBIT was €1,910 million (2020: €1,047 million), while the adjusted EBIT margin rose to 5.0 percent (2020: 3.2 percent). Free cash flow adjusted for M&A activities stood at €991 million (2020: €994 million). “In a volatile environment marked by profit warnings and revised forecasts, we successfully achieved our targets in the middle of our forecast range,” said ZF CFO Konstantin Sauer. “This means we were able not only to make substantial investments but also to reduce our financial liabilities and strengthen our equity ratio.” Gross debt was reduced by €752 million to €12.5 billion. At the end of 2021, equity ratio stood at around 19 percent (2020: 12.1 percent).
ZF further increased its activities in research and development (R&D). Last year, the R&D ratio was 8.0 percent (2020: 7.7 percent), which equates to R&D spending of €3.1 billion (2020: €2.5 billion) – the highest ever in ZF history. Investments in property, plant and equipment were €1.6 billion (2020: €1.4 billion), resulting in an investment ratio of 4.2 percent (2020: 4.4 percent).
Sustainability: ZF on track for climate neutrality by 2040
ZF is striving to be climate-neutral by 2040. To achieve this, the company is acting in many different areas. For example, via power purchase agreements (PPA) concluded in 2021 with producers of wind and solar energy, ZF plants in Germany will be supplied with up to 210 gigawatt hours of green electricity in each of the years 2022 to 2025. The agreed volumes, which correspond to the electricity consumption of 72,000 homes, will reduce CO2 emissions by 80,000 tons annually.
Within the scope of its sustainability strategy, ZF was also the first automotive supplier in Germany to issue two green bonds totaling €1 billion for the first time in 2021.
2022 remains challenging
Following the positive market development in 2021, the business conditions remain highly challenging and volatile. Even though the semiconductor supply is expected to improve in the second half of 2022, the ongoing Covid-19 pandemic, general supply bottlenecks, and rising inflation make an outlook for the current year more difficult. The war in Ukraine and its negative global impact exacerbates this situation. The disruption of supply chains of both passenger car and commercial vehicle manufacturers has already caused the first production halts. Although ZF is not currently affected significantly by war-related supply chain issues today, downtime at their customers has led to fewer call-offs at ZF. The extent to which a possible further escalation of the war in Ukraine will affect the global economy and industry growth in the fiscal year 2022 cannot currently be estimated.
For these reasons, ZF anticipates moderate growth in Group sales to a volume of more than €40 billion in 2022. This sales growth is expected to result in an adjusted EBIT margin of between 4.5 and 5.5 percent. Adjusted free cash flow is expected to be between €1.0 billion and €1.5 billion.
