InTheBite

ZF Increase Research and Development Activities After Record Sales in 2017

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ZF posts record sales in 2017; announces increased research and development activities

  • ZF chief executive officer announces further expansion of research and development activities during presentation of the company’s annual financial statements
  • The technology company produced record sales of €36.4 billion in 2017
  • Adjusted EBIT was higher at €2.3 billion, despite increases in research and development spending
  • Scheider believes that start-up culture could also be fostered in big companies

Friedrichshafen, Germany. ZF Friedrichshafen AG will increase their research and development spending again and work even faster to produce technologies for the future of mobility. CEO Wolf-Henning Scheider, who has been in office since February 1, made this statement at the company’s annual press conference in Friedrichshafen today. ZF ended the fiscal year 2017 with record sales of €36.4 billion, which, when adjusted for exchange rate effects and M&A activities, elicited organic growth of 6 percent. ZF also further reduced the debt incurred from the acquisition of TRW Automotive and posted a higher adjusted EBIT of €2.3 billion, despite increased research and development costs.

“The world of mobility is spinning at high speed,” said Scheider. “We plan to provide our customers with pioneering solutions in all fields under our motto ‘See – Think – Act’, which is why we will further increase our research and development spending.”

In 2017, ZF spent €2.2 billion on research and development, an increase of almost 15 percent compared to 2016. This year, significantly more than two billion is set to be channeled into development work around the world, with the aim of advancing electric drives and the hybridization of transmission technology as well as vehicle safety systems and automated driving. This means that the share of the budget allocated to R&D will be raised from 6.1 percent to around 6.5 percent this year. Equally, ZF wishes to continue investing in property, plant and equipment (2017: €1.4 billion). Two new plants for the production of electric drive components are planned, among other things.

Sales increase by six percent
In 2017, ZF experienced a nominal increase of 3.6 percent to €36.4 billion in Group sales (2016: €35.2 billion). Adjusted for exchange rate effects and M&A activities, organic sales growth is six percent. “This result shows our employees’ commitment and high level of motivation,” said Scheider. The Commercial Vehicle Technology and Car Powertrain Technology Divisions had above-average sales increases of 7.2 percent and 9.3 percent, respectively. “Our extremely efficient automatic passenger car transmissions contribute to reducing CO2emissions. They are therefore a key component in attaining the European limit targets and global climate targets, and are in high demand. Combined with the highly integrated electric motor, this technology still features great growth potential,” said Scheider.

Regional growth was mixed. In both Europe and North America, sales rose by over three percent. Organic growth of eight percent in the Asia-Pacific region was reduced to around two percent by the negative currency effect of the Chinese Renminbi. It appears that the economic crisis in South America has, to a large extent, been overcome. Sales there increased significantly by around 26 percent, coming from a low level.

The headcount for the ZF Group was 146,148 on the effective date, December 31, 2017 (2016: 136,820). Additional posts were created mainly in China, Mexico, Portugal, the USA and Germany, most of them within the Active & Passive Safety Technology, E-Mobility, Car Chassis Technology and Car Powertrain Technology Divisions. Of these, around 1,700 worldwide were attributed to research and development alone.

Stable profits, greater productivity
Last year, ZF not only increased its sales but also its profit situation. Adjusted earnings before interest and taxes (EBIT) increased from €2.2 billion to €2.3 billion; the adjusted EBIT margin was equal to the previous year’s, at 6.4 percent. Both sales and earnings are therefore at the upper end of the amounts predicted early in 2017. The adjusted free cash flow amounted to €1.8 billion at the end of last year (2016: €2.0 billion). The equity ratio has risen again, from 21 to 24.4 percent. “We are looking back at a profitable and successful year,” said Dr. Konstantin Sauer, chief financial officer at ZF. “We have improved our processes and cost structures within a challenging environment, and have become even more productive. We have therefore been able to finance higher budgets for research and development, at the same time improving the earnings quality.”

In around two and a half years after acquiring TRW Automotive in May 2015, ZF succeeded in reducing gross debt to €6.4 billion, almost half of the original amount, by the end of 2017. “Based on the strong free cash flow, our aim is to further reduce financial liabilities and continue to drive forward the debt relief of the ZF Group in 2018,” said Sauer.

Prospects for 2018
Market development is volatile around the world. Taking this into consideration, ZF CEO Scheider predicts organic growth of around five percent for 2018. ZF expects to conclude the sale of the Body Control Systems Business Unit to Luxshare soon, which will result in a proportional drop in sales. Consequently, ZF expects Group sales of around €36.5 billion. As in the previous year, ZF is aiming to achieve an adjusted EBIT of around six percent and an adjusted free cash flow of over one billion euros.

More speed for innovation
The requirements of the dynamic development in the automotive industry are highly demanding, so ZF’s CEO Wolf-Henning Scheider wishes to accelerate project-related cooperation within the Group. “We are reinforcing the implementation of cross-divisional teams with a high level of autonomy in decision-making and cooperation,” said Scheider. “They are better able to adapt to the requirements in the new fields of technology, which are changing so quickly. We work even more closely with our customers for these projects and at an earlier stage so that attractive products can be brought into volume production much more quickly. However, this also means that a project can be abandoned swiftly if the expectations cannot be met. With this approach, a start-up culture can be present in a big group.”

ZF teams would constantly have to be recreated, strictly according to the current project requirements so that they can answer the questions of the future, in order to quickly develop the best possible solutions for the customers. Several automated driving projects serve as examples for this. “In conjunction with our tried-and-trusted development of volume production projects in the traditional fields, we now also work with a dual operating system,” explained Scheider.

FECOP – Researching Pacific Tarpon in Costa Rica

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FECOP to Study Pacific Tarpon in Costa Rica

San Jose, Costa Rica-February 27, 2018- Twenty-seven years ago, Didiher Chacon was a young biologist from the National University in Costa Rica. Todd Staley, co-creator of 12 Fathom Jigs that forever changed tarpon fishing in Boca Grande, Florida, in the late 1980s, had just moved to Costa Rica to manage Archie Fields’ Rio Colorado Lodge, a world-famous tarpon destination. Chacon stopped by the lodge one day to explain he was collecting tarpon samples for analysis by Dr. Roy Crabtree in Florida. Staley, who was familiar with Crabtree’s work, jumped at the chance to catch a few tarpon and help science at the same time.

Chacon went on to become well respected in marine conservation circles. He is currently the director of the NGO, Latin American Sea Turtles, as well as a professor at the National University in the post-degree program. Staley moved to the Pacific side of Costa Rica after Archie Fields died and for two decades managed famous billfish destinations like Golfito Sailfish Ranch and Crocodile Bay. He began working full time for FECOP, a Costa Rica sport-fishing advocacy and conservation group, last May.

“I first saw a tarpon roll in the Pacific back in 1995,” Staley explains. “For a minute I thought I was losing my mind but then I thought, I have seen tarpon roll my whole life, I know one when I see one.” Eventually one of the charter captains returned to the dock one day with a 40-pound tarpon and had no idea what it was. Since then clients have hooked five to 10 tarpon a year, occasionally landing and releasing a few. The largest tarpon taken was estimated around 130 pounds. It has always been assumed that the tarpon, which are not indigenous to Pacific waters, passed through the Panama Canal and took up residence on the Pacific coast.

The puzzle got even more interesting when Saul Porras caught a baby tarpon while snook fishing at the mouth of a creek on the Osa Peninsula in southern Costa Rica. Chances that little guy passed through the canal and swam that far are extremely slim. So, are tarpon now breeding in the Pacific? They have been caught all along the Pacific coast of Costa Rica, especially in the southern zone. An increasing number have been taken in the Sierpe and Coto Rivers. Tarpon have also been have recorded as far south as Colombia and as far north as El Salvador.

FECOP agreed to sponsor a project to find out more about tarpon in the Pacific. Staley contacted Chacon (the two had remained friends over the years) and he agreed to work on the science part of the project. “The Sierpe Wetlands are perfect habitat for juvenile tarpon,” Chacon says. “That very well may account for the increase in numbers of tarpon caught there in the last few years.” Most of the river tarpon are small, less than 30 pounds, but some as large as 100 pounds have also been captured.

Tropical Storm Nate delayed the project when massive amounts of rain fell, which not only caused major landslides but also completely flushed everything out many of the coastal rivers.

Phase 1 of the project will concentrate in southern Costa Rica. A DNA comparison will be done between Pacific-caught tarpon and tarpon taken at various locations on the Caribbean side of the country. Biologists will also study what the Pacific tarpon have been feeding on. This can be accomplished with a small tissue sample without sacrificing the fish. All Pacific-caught tarpon will also be tagged.

Chacon notes that there is a possibility tarpon could change the ecology of the rivers over time. So far it is not yet known what these tarpon are feeding on or how they will affect native fish. But the ever-increasing encounters along Costa Rica’s Pacific coast make it worth finding out.

For more information contact: www.fishcostarica.org  or  info@fecop.org