ZF Friedrichshafen boosted 2018 sales 6% year on year to EUR 36.9bn but adjusted EBIT fell to EUR 2.1bn from EUR 2.3bn as adjusted EBIT margin slipped to 5.6% from 6.4%.

The giant supplier, which swallowed up rival TRW several years ago, boosted R&D spending 11% in 2018 to EUR 2.5bn, an R&D cost ratio of 6.7%.

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It has just signed a supply contract with BMW for its eight-speed automatic transmission including a hybrid variant.

"The long-term contract represents the largest order of automatic transmissions in the history of the company, confirming the importance of hybrid technology for future individual mobility," ZF told its annual results press conference.

Electrical central drive for passenger cars will start production with a 'vehicle manufacturer' this year.

ZF also recently announced the EUR7bn takeover of Wabco, the supplier of braking control systems, technology and services for trucks, buses, and trailers.

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The deal is expected to close early next year and "will help make ZF less dependent in the long term on the cycles of the passenger vehicle market".

In 2018 ZF's commercial vehicle technology (12%) and industrial technology (13%) divisions booked above-average sales growth.

ZF said it had continued to reduce its liabilities incurred from the TRW acquisition.

"In the fiscal year just ended, we reduced the gross debt by EUR 1.4bn to EUR 5.0bn, further strengthening our company's financial independence," said CFO Konstantin Sauer. "With an equity ratio of 28% (up from 24% a year ago), ZF has a solid economic foundation."

Looking ahead, the suppler said: "Ongoing uncertainties in the political and economic development of many countries, as well as new regulatory frameworks for emission legislation continue to create a tense and challenging environment worldwide."

It expects 2019 sales of between EUR 37bn and EUR 38bn and an adjusted EBIT margin of between 5.0% and 5.5%.