ZF plant in Friedrichshafen
The supplier benefited from the rapid recovery of the Chinese auto market in 2020.
(Photo: dpa)
Düsseldorf The corona crisis weighs on the results of ZF Friedrichshafen: According to the preliminary figures published by Germany’s third-largest auto supplier this Monday morning, sales have fallen by around eleven percent to 32.6 billion euros. This means that ZF is roughly on par with Bosch, the second German foundation supplier.
The industry leader granted a look at his books at the beginning of February. According to this, sales in Bosch’s automotive supplier division Mobility Solutions fell by 9.5 percent to 42.3 billion euros.
Continental, Germany’s second largest supplier ahead of ZF and, in contrast to Bosch and ZF, is a listed company, has not yet published its 2020 figures. However, the 2020 corona year is likely to have left deeper marks on the DAX supplier compared to Bosch and ZF.
Conti expects sales in its auto supplier division to decline by around 17 percent. In addition, Conti assumes that the core division will slide into the red with an adjusted EBIT margin of minus 1.5 percent in the past fiscal year. It doesn’t look much better at supplier Mahle. The number four in Germany has lost around 16 percent in sales.
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At ZF, things didn’t look much better in the first six months of 2020 either. Due to the lockdown in spring 2020, ZF suffered a sales decline of 27 percent in the first six months.
The foundation group justifies the comparatively solid figures at the end of the financial year with its strong presence in China. The entire auto industry in Germany has benefited from the rapid recovery of the auto market in China.
Negative earnings after taxes
With the adjusted EBIT margin, ZF comes to 3.2 percent and is only slightly below the previous year’s figure. In 2019, the company had already achieved a rather weak profit margin of just over four percent compared to the industry.
In order to cushion the effects of the corona crisis, ZF has imposed strict cost discipline and introduced reduced working hours. This enabled the company to increase its free cash flow from 803 to around one billion euros.
For comparison: Bosch has a free cash flow of five billion euros. Continental expects around half a billion euros. However, in contrast to the non-share-listed foundation groups, Continental also has dividend outflows that burden the cash flow.
However, the cost-cutting measures could not prevent ZF from writing in the red after taxes. “ZF’s earnings after taxes 2020 will nevertheless be clearly negative, also due to high advance payments for future tasks,” the company announced in a letter. ZF is thus continuing its downward trend. Profit after tax has been falling since 2017. On March 18, ZF will publish its consolidated financial statements with detailed figures and an outlook for 2021.
More: Bosch reports record cash flow despite lower sales – electric offensive begins to take effect.