ZF’s annual press conference and financial report for 2016 was a big event, given it involved the first full year after ZF acquired TRW in 2015. Overall, the reported figures were that sales rose 21% to €35.1bn, and net profits after tax were €924m million—down slightly from €1bn in 2015.
When asked if the U.K.’s application to exit the European Union will force ZF to relocate any production facilities, CEO Sommer said protectionism can result in trade barriers that lead to job relocations: “This means that protectionism destroys value and cost structures that are established…and this weakens us in the global competition we have with Asia, for example,” Sommer said. “We have major disadvantages due to this protectionist tendency. If Europe is weakened in its performance and if obstacles are built, then in the long run we will lose added-value, lose jobs. They will be lost to Asia. Looking at the U.S., our supply volume from Mexico to the U.S. or from Europe to the U.S., then that would have a major impact if things are decided in the short run…all these people who are trying to build walls, they will be the losers in the end.”
Sommer forecasts ZF closing out 2017 with €36bn in revenues, EBITDA margin exceeding 10%, and free cashflow of more than €1bn. He foresees modest growth in Europe: “What we can see currently in terms of risks coming from Brexit and insecure political developments is not materialising yet in our business environment…actually, we’re expecting this will not have an impact in 2017. Of course, we are very worried about the protectionist tendencies in the economic areas.”
