In what can be deemed to be an excellent recovery from the horrific times last year owing to the outbreak of the COVID-19 pandemic, diversified supplier ZF has reported a 43% year-on-year growth in its sales in H1 CY21. The group reported sales of € 19.3 billion in the first six months of this year as against € 13.5 billion in H1 CY20.
ZF’s performance is in contrast with the overall difficult and volatile international market environment, said the company that reported adjusted EBIT at € 1 billion against the minus € 177 million last year. Clearly, the company benefited from the general economic recovery of the automotive industry in H1 this year.
While expressing satisfaction over achieved the targets in H1 CY21, Dr Konstantin Sauer, CFO, ZF said cost containment remains a vital topic for ZF in order to continue this positive development.
ZF, meanwhile, has decided to stick to its forecast for the overall year considering the recent developments and the prospects for the next few months, which are characterised by uncertainties due to the current supply chain situation. Overall sales this year is likely to be in the region of € 37-39 billion. From today’s perspective, sales are expected to be at the upper end of the range, the company said.
The company expects an adjusted EBIT margin in the range of 4.5-5.5%, as against the 5.2% in H1 CY21 and minus 1.3% in the same period in 2020.
In H2 this year, ZF expects a sustained burden due to higher costs for raw materials and logistics services. Risks could emerge from the continued limited availability of semiconductors and the further development of the COVID-19 pandemic, said the company.
Wolf-Henning Scheider, Chief Executive Officer, ZF said, “We took the momentum from the second half of 2020 into this year and benefited from the economic recovery of the automotive industry.”
Scheider harped on how ZF has continued to develop the organisation in terms of agile cooperation and secured numerous new orders with innovative technologies for lowering emissions and enhancing vehicle safety.
The first half of the year was also characterised by immediate effects of the semiconductor shortage, interrupted supply chains, as well as the price increases for raw materials and logistics services. To subvert these challenges, the company has partially re-adjusted its supply chains and shortened them by increasingly involving local suppliers.
In must be noted that the green bond ZF had issued for the first time in April this year has received great interest. The six-year bond with a yield of 2%, targeted at institutional investors, was oversubscribed six times. The proceeds of € 500 million will support ZF’s future endeavours in wind power and electric mobility businesses.
Consolidation in progress
Meanwhile, in the course of its WABCO acquisition, ZF sold its 49% share in the Brakes India joint venture in June. After the shareholding in the WABCO India subsidiary was increased from 75% to 93% in 2020 as part of a mandatory takeover bid, the shareholding was reduced to 77% in H1 CY21. A further 2% will be sold in H2 CY21 so that a 75% shareholding quota is finally restored, announced the company.
As of January 1, 2022, the two ZF commercial vehicle divisions will formally act as one unit, the combined Commercial Vehicle Solutions Division. The two divisions are already successfully operating in the market, expecting a significant sales increase for 2021.
“Soon after the acquisition of WABCO, customers recognised us as a systems supplier for commercial vehicle technology, whose product range offers them comprehensive solutions and advantages,” said Scheider. With the technologies combined in systems, the company was able to secure a significant order volume that extends far into the future, and encompasses both autonomous driving as well as fleet management & electromobility, said the CEO.
Last month, the company also signed an agreement with Airbus Helicopters on the acquisition of ZF Luftfahrttechnik GmbH in Kassel-Calden, Germany by Airbus Helicopters. The intended sale of this successful aviation technology business opens good prospects for the future development of the business unit, it said.