ZF reaches financial targets for 2023

ZF achieved its financial targets for 2023. In the context of a highly volatile global economy, it increased turnover by 6.5 percent to 46.6 billion euros (2022: 43.8 billion of Euro). Adjusted EBIT is 2.4 billion euros (2022: 2.0 billion euros); the adjusted EBIT margin is 5.1 percent (2022: 4.7 percent). Thanks to the positive trend in free cash flow in the second half of the year, ZF repaid liabilities of around 2 billion euros and reduced net debt by 400 million euros, bringing it below 10 billion euros.

“2023 was a year of wide-ranging decisions for ZF. We have reviewed the company’s transformation path and focused on competitiveness and profitability,” declared CEO Holger Klein (on the left in the opening photo) at the presentation of the financial statements in Friedrichshafen.

As Klein mentioned, some important decisions have been made in 2023. One of these was the preparation for the merger between the Car Chassis Technology Division and the Active Safety Systems Division into the new Chassis Solutions Division, which took place on 1 January this year. Furthermore, the spin-off of the Passive Safety Systems Division has begun. Another important step was the creation of a joint venture for passenger car chassis systems, ZF Chassis Modules GmbH, with Foxconn, the world’s largest electronics manufacturer.

To become more globally competitive and respond to market weakness, ZF will use performance-related programs and focus even more on improving costs and structures. By the end of 2025, the cost base will have to be reduced by 6 billion euros at Group level. Five main areas will contribute to this goal. These include achieving effects on the purchase price of materials, increasing productivity, improving research and development costs and cost structure in business functions and a detailed review of investments for their targeted use.

In fiscal 2023, ZF repaid liabilities totaling approximately 2 billion euros. “Our priority is to systematically address debt relief and refinancing,” said Chief Financial Officer Michael Frick (pictured right). Based on the ZF Green Finance Framework, three bond issues were carried out. “These releases have all been in high demand. The markets continue to believe in ZF and our ability to manage the transformation,” said Frick.

ZF: forecasts for 2024 and future investments

The forecast for the fiscal year 2024 remains cautious: in the presence of stable exchange rates and considering the planned corporate transactions, ZF expects Group sales of more than 45 billion euros in 2024 (+5%). With the expected development of the sales and supply markets, together with the associated control of cost structures, ZF believes an adjusted EBIT margin of between 4.9 and 5.4 percent is achievable. Adjusted free cash flow from corporate operations is expected to exceed €800 million.

Klein confirmed ZF’s plan to make future global investments of almost 18 billion euros by the end of 2026. Of this, around 10.6 billion euros will be spent on research and development and more than 7 billion euros will be invested in buildings, plants and equipment. As competitiveness increases, ZF’s German locations will receive up to 30 percent of these investments.