Slumping sales in North America and fast-rising raw material costs are two key concerns for the giant component, transmissions and systems supplier ZF Friedrichshafen, senior executives have said.
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But overall results for 2007 were nonetheless pleasing with group sales up 8% to EUR12.65bn, operating profit up 35% to EUR917m and net profit up a massive 70% to EUR518m, they said at a Stuttgart press conference.
Capital expenditure rose 25% to EUR584m and R&D spend was up 15% to EUR694m.
But North American revenue slumped 19% to EUR1.279bn.
Finance chief Willi Berchold said this was due in part to some automaker customers taking purchasing of complete systems back in-house.
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By GlobalData“The dollar region remains in focus,” he said. But ZF still had 19 sites there (after closing two) and was looking to do more in the zone, such as increasing spend on raw materials (like aluminium and castings) and purchasing more items such as fasteners.
CEO Hans-Georg Harter told just-auto in a subsequent interview that the company had allocated eight Detroit-based employees to source more in the dollar zone as part of the company’s overall currency hedging process.
“New projects will increase sales and we do not foresee any further closures,” Berchold said.
Among the new products: automatic transmissions for Nissan pickup trucks as part of the Japanese automaker’s expansion in the market and some undisclosed projects with Honda.
“[North America] is our major concern,” Harter reiterated to just-auto after the results presentation. He said the company was concentrating all its efforts to maintain the current situation with no further falls in sales.
“Market pressure is challenging,” he added, noting that ZF would increase exports and “serve world markets from the USA”.
Western Europe remains the most important ZF market and revenue was up 8% here to EUR8.469bn. Eastern Europe grew 10% to EUR601m.
But the biggest growth was in Asia-Pacific where revenues rose 46% to EUR1.627bn, driven by rises in China and India.
ZF said the “disproportionate” increase in the cost of materials as a proportion of the total cost of sales continued in 2007 – EUR6.985m of EUR10.027 vs EUR6.384 of EUR9.368m in 2006.
First quarter 2008 group sales are up 3% with changes by division varying from –4% to +20%. ZF said this was due to a shorter number of working days in March (due to an early Easter) and expected to make this up in April.
Executives also said they were buoyed by the VDA announcement of an expected 10% rise in German car sales this year.
They also spoke favourably of South America, where group sales reached EUR478m, up over 30%.
“Brazilian market capacity utilisation is at a 30-year high, the economy is stable and inflation is at an acceptable level, they noted.
Graeme Roberts
