ZF sees sales dip in first half 2024

ZF Friedrichshafen AG announced it has closed out the first half of 2024 (January to June 30) with sales of €21.9 billion, a 5.6% decrease from the €23.3 billion reported for the first half 2023. Taking into account special effects, mainly from M&A activities, sales revenues were close to the previous year’s level (-0.1%), the company reported.

Photo: ZF Friedrichshafen AG

Adjusted EBIT totaled €780 million with an adjusted EBIT margin of 3.5%, compared to €941 million in 2023 and 4.0% for the prior year period. Earnings were influenced by continuing high R&D expenditures (€1.8 billion), declining volumes due to weak trends in vehicle markets and fixed costs for launches of new plants and products, the company indicated.

“The persistently challenging market environment is reflected in our sales. Meanwhile, our earnings and cash generation are meeting our expectations,” said ZF CFO Michael Frick. “At the same time, we are improving our competitiveness and – in line with the guiding principle ‘Strengthening our strengths’ – continuing to push ahead with the structural development of our company.”

Frick said ZF is “investing primarily in high-margin, forward-looking areas such as commercial vehicles and industrial technology, chassis solutions and the service business.” The company also announced previously the more efficient organization of it German locations aimed at merging them into several site networks.

This includes the ongoing “carve-out” of ZF Lifetec, the Passive Safety Systems division, with the last formal measures currently ongoing.

“We are exploring all strategic options in an open-ended process to further develop ZF Lifetec in the best possible way and will act accordingly when the time is right,” Frick stated. “As a standalone company, ZF Lifetec is expected to gain the strategic advantage to further enable growth in sales and profitability. The division’s sales once again performed above global light vehicle production in the first half-year of 2024.”

ZF expects the weak economic environment experienced at the beginning of the year to worsen in the second half. With customer call-offs slower than expected and in view of the current weak demand for all-electric vehicles, the company said it has conservatively adjusted its sales forecast for 2024 to a range between €42.5 billion and €43.5 billion.

For the adjusted EBIT margin, ZF confirms its previous full-year projection of between 4.9% and 5.4%. The company said it intends to make further flexibility gains in production and assumes that the effects of the implemented performance measures will intensify over time.