ZF Faces Sharp Declines in Sales and Profits for 2009
15 September 2009
Friedrichshafen, Frankfurt, Germany - Sales for ZF have fallen by a third from January to August 2009 compared to the first eight months of 2008. For the entire year, ZF estimates that corporate sales will fall by a quarter to €9.2 billion and anticipates sharp net losses. The number of corporate employees will be reduced by 6% to approximately 59,800 by year's end. At its German sites, about three-quarters of ZF employees are on subsidized short working hours or have had their work hours otherwise cut.
ZF CEO Hans-Georg Härter said at the Group’s IAA press conference in Frankfurt: "ZF is feeling the effects of the economic crisis very deeply. There is still great uncertainty in the marketplace, which is obscuring a clear view of the coming months."
Härter added: "It remains to be seen if government stimulus programs, such as Germany's 'cash-for-clunkers' scheme, can sustain an elevated demand for cars. We cannot exclude a W-shaped trend – in which case, we are now riding an artificially generated peak before entering a second valley."
Above all, the ZF commercial vehicle segment’s 50% sales decline offers little cause for optimism. "The earliest foreseeable recovery would be in late 2010," said Härter, who sees "no major overall recovery next year, but slight, low-level growth at best." One positive sign is budding automobile demand in South America and Asia: Brazil, India and China continue to be the growth drivers in the global economy. In contrast, Russia, as the fourth BRIC nation, has lost significant ground due to serious sales declines.
ZF is combating the massive loss in sales and consequent negative group profit figures with cost reductions in all areas – from purchasing and logistics to production, IT and finance. ZF is lowering personnel costs primarily through the almost universal application of subsidised short working hours as well as other measures to reduce the weekly work hours of its employees. About three-quarters of all German ZF employees are subject to these measures.
Overseas, ZF has laid off about 800 employees in North America and 500 employees in South America, while adding about 500 new positions in Asian growth markets. By the end of 2009, there will be approximately 59,800 ZF employees, slightly more than 6% fewer than at the end of last year.
"The fact that ZF has always operated according to sound business principles and has paid particular attention to liquidity since the beginning of the crisis is now paying off," said Härter, giving grounds for his cautious optimism. "Car makers are becoming increasingly determined to work with suppliers who are stable, dependable partners committed to a long-term business relationship. Our liquidity serves as an insurance policy in this regard. We must now safeguard this position with our austerity plan."
Härter also points to the group's long commitment to manufacturing resource-conserving, fuel-saving pollution-reducing products as an important factor in overcoming the crisis soundly and independently.
Härter added: "Our product portfolio is ideally suited to the future. The ever-growing trend towards sustainable products that are both economically and ecologically friendly will once again put us on a growth path in the medium term."
