Germany Tier 1 supplier is looking to accelerate change in the time of transformation needs, but CEO, Dr. Holger Klein believes that despite the company achieving its forecast adjusted in the fall, they are not sufficient to cope with an accelerated change in times of transformation.
“Even though we made further progress with our strategy in 2022, we cannot be satisfied with this financial result. Our most important task is to focus ourselves, and to push change and gain speed. We have launched a comprehensive performance program to accelerate processes, simplify decision making and maintain cost discipline,” said Dr. Klein
The efficiency gained will enable ZF to make targeted investments in high-yield, future-oriented technologies.
For 2022, the company reported revenue of 43.8 billion euro (Rs 384,914 crore), up 14 percent compared to 38.3 billion euro (Rs 336,580 crore) a year ago. ZF says it has continued its strategic course in the extraordinarily demanding year of 2022 and set the course for future economic development. Some areas will be opened up to potential partners and investors. Others should be able to act more efficiently and closely with the customer through mergers. These steps aim to align it more clearly with future fields and make it more profitable.
Streamlining Corporate Structure
Based on the ‘Next Generation Mobility’ strategy, ZF says it is further developing its corporate structures to better adapt them to the requirements of customers and the market. It plans, among other things, to unite the two divisions for Car Chassis Technology and Active Safety Systems into a new division for chassis, steering and brake technology that is unique in the market.
“The new division offers all the hardware, software and electronics needed to control the vertical, longitudinal and lateral dynamics of a vehicle. With a turnover of more than 14 billion euro (Rs 123,032 crore), it should be a strong partner for our customers from the start,” added Dr. Klein.
The German technology company is also setting up some business areas independently so that they can grow faster and operate more successfully in the market. “We are looking for external investors as partners for attractive areas with very good growth potential and high investment requirements,” said Klein. These include the Passive Safety Systems Division, the conventional car axle business and the business with autonomous shuttles.
Michael Frick, CFO, ZF added that “In terms of sales growth, we developed better than the global vehicle markets. However, better profitability and higher cash flow are important prerequisites to remain strong in research and development and to reduce our financial debt. We are working intensively on both topics.”
This includes, for example, reducing costs as well as efficient management of stocks to be prepared for both possible supply chain interruptions and varying parts requests from customers.
Outlook for 2023
Based on vehicle production, which has been shrinking since 2019, ZF is now expecting a fifth consecutive year of crisis in the wake of the pandemic and the beginning of the war in Ukraine. Against the backdrop of existing challenges and ongoing uncertainties surrounding world markets, in 2023 the company expects moderate growth in group sales to more than 45 billion euro (Rs 395,460 crore).