Production of the ZF TraXon heavy-truck automatic transmission in the company’s Friedrichshafen, Germany plant. Photos: ZF

Production of the ZF TraXon heavy-truck automatic transmission in the company’s Friedrichshafen, Germany plant. Photos: ZF

Global component supplier ZF Friedrichshafen AG reported on March 30 that it closed its 2016 fiscal year with a “significant rise in profits and a strong improvement in cash flow.” The upshot is the Germany-based company is poised for further growth.

The company said that sales for the fiscal year rose by 20.6% to €35.2 billion ($37.6 billion) while its adjusted EBIT (earnings before interest and taxes) margin rose one percentage point to 6.4% and its adjusted free cash flow totaled €2 billion ($2.1 billion).

ZF CEO Dr. Stefan Sommer

ZF CEO Dr. Stefan Sommer

ZF said that thanks to being in this strong financial position, it was able to cut its debt from the acquisition of Michigan-based TRW by €1.6 billion ($1.7 billion) while increasing spending on research and development to €2 billion ($2.1 billion).

In 2017, the company said it is targeting sales of approximately €36 billion ($38.4 billion) and an adjusted EBIT margin of more than 6%.

“ZF demonstrated its strength in 2016 with outstanding business figures and innovative products,” said CEO Dr. Stefan Sommer. “This strength gives us a solid foundation to help shape the challenging transformation in the automotive industry through digitalization, electromobility and autonomous driving.”

CFO Konstantin Sauer noted that ZF’s “sound income and financial power in 2016 as well as our strong free cash flow of more than €2 billion allowed us to quickly reduce the debt from the TRW acquisition and simultaneously invest in future technologies.”

Sommer stressed that given its current financial position, ZF can “afford to invest heavily in future-oriented technology.” He said that the company is now “grasping the opportunity of transforming itself into a leading technology company in e-mobility and autonomous driving.

“Our strength is our combination of hardware and software,” Sommer added. “So we produce intelligent mechanical systems.”

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