In 2021, the global technology company ZF Group successfully met its financial targets in a challenging business environment. Group sales totaled €38.3 billion, up 17.5% year-on-year, significantly exceeding the Group's 2020 and 2019 levels (€32.6 billion and €36.5 billion in both years). The Group's adjusted EBITDA amounted to EUR 1.9 billion (EUR 1 billion in 2020) and its adjusted EBIT margin increased to 5.0% (3.2% in 2020). Over the past year, ZF has been advancing its strategy to focus on the future of mobility, with numerous business contracts with new customers in the three core areas of electric drive, autonomous driving and software development.
Wolf-Henning Scheider, CEO of ZF Group
Wolf-Henning Scheider, CEO of ZF Group, said in his earnings report on March 17: "The international market environment over the past year has been challenging, but we remain confident that we have achieved the targets set at the beginning of the year. Dedicated, determined and team-oriented, our employees play a vital role in meeting the challenges of special times. We have adapted to the new normal and become more agile, flexible and digital. "Especially in the second half of 2021, as the COVID-19 pandemic continues to spread around the world, the impact of global supply chain disruptions and last-minute order changes is always present, and the external environment places extraordinary high standards on the company's production and material management flexibility.
Scheider emphasizes that ZF has achieved its own strategic milestones and laid the foundation for future development. For example, at the beginning of 2021, ZF successfully established the Electric Drive Drive Technology Division, integrated the Commercial Vehicle Solutions Division after the successful acquisition of WABCO, and successfully developed the ZF Cloud in cooperation with Microsoft. ZF Cloud will operate digitally and networkedly, providing access to company data and processes worldwide. To serve the electric and software-defined vehicles of the future, ZF is also advancing the further integration of its product lines. In addition, ZF Group provides solutions and contracts for international passenger car and commercial vehicle manufacturers, laying a good foundation for future development.
Key figures for 2021: Expected targets have been achieved
In 2021, the ZF Group achieved sales of €38.3 billion (2020: EUR 32.6 billion), an increase of 17.5 percent year-on-year. Adjusted EBIT reached EUR 1.91 billion (EUR 1,047 million in 2020) and the adjusted EBIT margin increased to 5.0% (3.2% in 2020). Adjusted free cash flow after the acquisition amounted to EUR 991 million (EUR 994 million in 2020). Dr Konstantin Sauer, Chief Financial Officer of ZF, said: "Market turbulence is accompanied by profit warnings and forecast adjustments, and our success in achieving our targets within the forecast range demonstrates our ability not only to invest more, but also to reduce debt and strengthen equity ratios. "In 2021, ZF's total liabilities fell by €752 million to €12.5 billion and the equity ratio increased to around 19 percent (compared to 12.1 percent in 2020).
Dr. Konstantin Sauer, Chief Financial Officer of ZF
In 2021, ZF invested a record 3.1 billion euros in R&D (2.5 billion euros in 2020), with R&D expenses increasing to 8.0% (7.7% in 2020). In terms of fixed assets, plant and equipment, the Group invested 1.6 billion euros (1.4 billion euros in 2020) with an investment ratio of 4.2% (4.4% in 2020).
Asia Pacific remains a regional market for ZF Group's strong performance. Sales in Asia Pacific will reach €9 billion in 2021 (7.9 billion euros in 2020). Among them, sales in China will be 7 billion euros in 2021 (6.4 billion euros in 2020).
Dr. Holger Klein, Director of the ZF Group
Dr. Holger Klein, Director of ZF Group, said: "Asia Pacific is a dynamic market. As a multinational company, ZF is investing more and more here. Through enhanced customer contact and technological innovation, we achieved strong sales growth of 14% in the Asia Pacific market in 2021. In China, in addition to winning the market-leading OEM business, we have signed a number of contracts with new car manufacturers to strengthen their relationship. In Japan, we have also successfully implemented a diversification strategy. While consolidating our business and relationships with key clients, we have made breakthroughs in winning new client projects. We are also exploring the huge potential of the Southeast Asian market. ZF is at the forefront of the automotive industry. Through collaboration with industry partners, we are increasingly playing a greater role in an open ecosystem. ”
Ms. Wang Runyi, President of ZF China and Senior Vice President of Operations Asia Pacific
Runyi Wang, President of ZF China and Senior Vice President of Operations Asia Pacific, said: "In 2021 ZF successfully held its 40th anniversary celebration in China. Over the past 40 years, ZF has experienced a historic leap from Sales in China, Made in China to R&D in China, and has been moving towards the goal of 'China leading'. We are using the world's leading technology and production technology to contribute to the development of China's automotive industry. At the same time, China has become one of the first bases for ZF's global products and technologies to be launched. We will continue to deepen the Chinese market, continuously enhance innovation and development capabilities, promote digital manufacturing, close to and lead the market and technology wave, firmly assume social responsibility, start from the aspect of business operations, contribute to China's sustainable development, and work with Chinese partners to create 'next-generation mobility'." ”
Sustainable development strategy: achieving climate neutrality by 2040
ZF aims to achieve climate neutrality by 2040. To this end, ZF has taken action in various fields. For example, under the 2021 energy procurement agreement with wind and solar suppliers, ZF's plants in Germany will use 210 gigawatt hours of green electricity per year between 2022 and 2025, equivalent to the electricity consumption of 72,000 households, and will reduce carbon dioxide emissions by 80,000 tons per year. Scheider, CEO of ZF Group, emphasizes: "We focus on clear measures and timely action to make a direct and significant contribution to climate protection through the conclusion of customer contracts. ”
In advancing its sustainability strategy, ZF issued two rounds of green bonds totalling €1 billion for the first time in 2021, the first of its kind among German automotive suppliers. This is a decision made by ZF based on the Green Finance Framework, for which the company has also established structures and standards for sustainable financing. The proceeds from the green bond will be used to support the wind power business and the development of electric drives. Sauer, Chief Financial Officer of ZF, said: "Our green bonds attract a wider range of investors, aligning our financing with the Sustainable Development Goals and next-generation mobility strategies. ”
Human Resources: Improve employee skills and drive business change
In 2021, the ZF Group's HR structure also changed. The company has created approximately 3,600 new jobs worldwide, mainly in the areas of electric drives, autonomous driving and software development. ZF has also expanded the scope of training and qualifications to include the extensive training program "E-Cademy" for electric drives, designed to support employees in responding positively to technological change. In addition, through E-Cademy learning, employees are able to acquire specific qualifications for new jobs within the ZF Group. Currently, 13,000 ZF employees are already participating in various learning programmes, with the second phase of qualification starting in the middle of this year. Wolf-Henning Scheider, CEO of ZF Group, said: "Even if ZF employees were previously in other fields, through E-Cademy's studies, they can work together to shape the mobility of the future. ”
Outlook: 2022 remains challenging
After last year's positive market developments, the global business environment remains challenging and volatile in 2022. While global semiconductor supply tightness is expected to ease in the second half of this year, COVID-19, tight supply and inflation will make 2022 even more challenging.
Based on the above factors, ZF expects steady sales growth of more than €40 billion in 2022, an adjusted EBIT margin of between 4.5% and 5.5%, and an adjusted free cash flow of between €1 billion and €1.5 billion.
At the request of the Group CEO himself, the contract will not be renewed after the expiry of january 2023
Wolf-Henning Scheider informed the Group's Supervisory Board at a recent meeting that he had no intention of following up on the contract when it expires in January 2023. Considering that he has worked in the automotive industry for more than 30 years and is about to turn 60, he decided to end his rich career in the automotive industry at the end of the year to take on other challenges. Dr. Heinrich Heisinger, Chairman of the Supervisory Board of the Group Heinrich Hiesinger said: "Wolf-Henning Scheider has made a decisive contribution to ZF's development over the past four years by leading ZF as a leading supplier of high-end electronics as well as electromechanical systems in its business areas. ”