The interactive Annual Report 2018

Please select your interests by clicking the respective topical areas and discover the highlights of the ZF fiscal year 2018.

Key Figures
Strategy and Markets
Technology Focus
Mobility Megatrends
People@ZF
Board of Management
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Despite an increasingly difficult market environment, ZF continues to stay its course and has summarized 2018 as follows. Thanks to its strong market position in driveline and chassis technology as well as in active and passive safety technology, the Group can present a positive economic statement of financial position. We have our sights set firmly on the future: Our new strategic focus on “Next Generation Mobility” has manifested itself in a variety of market-ready innovations that are viable for the future. We are therefore continuing to write our success story with new products and services that will simultaneously impact the mobility of the next generation. We are attractive to existing as well as new customers because our unique selling propositions in our specialty areas of vehicle motion control, integrated safety, automated driving as well as electric mobility give us a clear profile. Our financial base remains strong with sales rising to €36.9 billion in 2018. The adjusted EBIT of €2.1 billion is slightly below the prior year’s level. ZF was able to generate this figure despite higher spending on research and development and a rise in material prices. The Group invested €2.5 billion in research and development and €1.6 billion in property, plant and equipment and intangible assets in order to guarantee its future viability with new products, services and capacities.
In all, ZF therefore generated a free cash flow of €0.9 billion adjusted for corporate sales and acquisitions. We have stayed on track regarding debt reduction and lowered the company’s gross debt resulting from the takeover of TRW in 2015 by a further €1.4 billion.
The prospects for the coming fiscal year are characterized by uncertain macroeconomic development. We are aiming for Group sales of between €37 and 38 billion, an adjusted EBIT margin between 5.0 and 5.5% as well as a free cash flow of roughly €1 billion adjusted for corporate sales and acquisitions. We will continue investing in future fields of mobility. We want to hold onto our leading positions in the market worldwide as a technological leader in our four areas of expertise. Lastly, I’d like to take this opportunity to thank all ZF employees for their commitment in the last year. After all, they will continue to be an essential factor of success for our company in the coming years. I’d also like to thank our customers and business partners for their trust in ZF.
Lastly, a very special thank you goes to the representatives of the shareholders and members of the Supervisory Board for their intensive support as the company continues to evolve. We will continue to write the success story of ZF.
„TODAY, WE ARE SHAPING THE MOBILITY OF THE NEXT GENERATION.“
— Wolf-Henning Scheider, Chief Executive Officer

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You will find all important facts and figures on the course of business in 2018 in the current Annual Report.

Key Figures

Key Figures

Key figures in comparison to the previous year

2018 2017
Sales €36,929 million €36,444 million
Adjusted EBIT €2,065 million €2,339 million
Adjusted EBIT margin 5.6 % 6.4 %
Net profit or loss before tax €1,225 million €1,409 million
in % of sales 3.3 % 3.9 %
Net profit or loss after tax €965 million €1,167 million
Adjusted free cash flow¹ €891 million €1,818 million
Investment in property, plant and equipment €1,586 million €1,350 million
Equity ratio (end of the year) 27.5 % 24.4 %
Dividends €195 million €50 million
Employees² 148,969 146,148
¹ Cash flow from operating activities less cash flow from investing activities, adjusted for company acquisitions and disposals.
² Direct and indirect employees without temporary workers, apprentices and vacation workers as of December 31, 2018.
Strategy and Markets

Strategy and Markets

Focused on new solutions

ZF has the ability to link technological competencies with one another. Connected solutions make it possible to offer customers and mobility users added value. ZF is pursuing the goal of clean and safe mobility that is automated, comfortable, affordable and accessible to everyone, everywhere: The "Next Generation Mobility" strategy.

Autonomous ride hailing, micromobility, mobility-as-a-service – these are just a few of the many new terms that clearly demonstrate what is happening in the mobility market. The field of applications continues to expand. Urban centers require different traffic solutions than rural areas. Conventional forms of individual vehicle ownership are being complemented to include special tailor-made services.

Technologies that support highly automated and autonomous driving are now available to make these new traffic concepts a reality, but will also define new safety requirements. The “Next Generation Mobility” that ZF has placed at the center of its strategy is taking shape. This is also true of the users who define demand due to added needs and social changes, thereby helping to impact additional market opportunities.

The hub of the mobility revolution: The ZF ProAI RoboThink is the most powerful supercomputer that the automotive industry currently has to offer. ZF is also deploying the AI-capable supercomputer in its connected system solutions.

Attractive for all markets

Hardly any other new ZF product makes this focus on the modern world of transport and mobility clearer than the ZF ProAI Robothink. It is the most powerful AI-capable supercomputer that the mobility industry currently has to offer. The flagship model of this flexibly scalable supercomputer can process up to 600 trillion calculations per second (600 Tera-OPS). This enables it to connect and process the data flow between internal and external sensors as well as cloud-based input and car-to-X communication in real time – to precisely control actuators in the drive and chassis. This is exactly what autonomous vehicles starting at Level 4 will need in order to operate safely in public transport.

With its systems expertise and its innovative product portfolio, ZF is attractive for all markets. There is a growing number of new vehicle manufacturers whose internal depth in development is minimal. They are in need of a one-stop supplier for the electric drive, steering system, brakes and sensors as well as automated driving know-how, so ZF is the right partner. Established automakers have similar needs because their own development capacities are no longer sufficient to meet the growing emissions and vehicle safety requirements and simultaneously develop marketable e-mobility and autonomous driving systems.

ZF has worked hard on its market appeal over the past decades. Now the company has to expand it. With its “Next Generation Mobility” strategy, ZF is playing out its unique selling proposition in two ways. First, it is utilizing sales opportunities and at the same time acquiring new customers and entering markets in which considerable sales shares can be earned, if not yet today or tomorrow, then probably the day after tomorrow.

The hub of the mobility revolution: The ZF ProAI Robothink is the most powerful supercomputer that the automotive industry currently has to offer. ZF is also deploying the AI-capable supercomputer in its connected system solutions.

The future of mobility: Autonomously on the go thanks to ZF ProAI

Mobility in all its facets

Sales of passenger cars and commercial vehicles remain high. Innovative types of vehicles will soon become part of the streetscape. Additional players will conquer the mobility market, establishing additional business models centered on the automobile. Will this create even more confusion? Not for ZF. With its comprehensive areas of expertise, the company has got the entire mobility market covered.

We are one of the world’s largest mobility technology companies. The fact that the industry is currently undergoing dramatic change is both a challenge and an opportunity for ZF. The Group has long been working on solutions for clean and safe mobility. We are focusing our activities on four technology fields in which we have gained many years of expertise. Customers are benefiting from this competitive edge because we can deliver the most modern components or integrate them to create complete systems, depending on the requirements. We are already a leader in these four technology fields. We apply our expertise to passenger cars as well as trucks, buses and even industrial applications, like autonomous forklift trucks or special vehicles for depots. Doing so generates synergy effects for ZF and additional benefits for our customers.

Vehicle Motion Control

The chassis, comprising all motion-related actuators, plays a major role in ensuring vehicle safety, comfort and efficiency. ZF can connect and align to one another all systems that impact longitudinal, transverse or vertical acceleration, so that cars and commercial vehicles can glide along quietly and safely regardless of whether they are being operated by a driver or autonomously.

Integrated Safety

One day, autonomous driving and intelligent traffic routing will make accidents a thing of the past. Until that time, occupant safety is critical, though. ZF already has the most comprehensive safety technology portfolio in the supplier industry. It ranges from sensors, brakes, steering systems and seat belts to airbags, electronics and active chassis that are equipped with systems such as the active adaptive rear axle (AKC).

Automated Driving

Automated driving will make mobility safer and everyday life easier for people. Systems from ZF like sensors, central computers and actuators are already enabling cars to see, think and act as well as drive autonomously. This will also lead to innovative mobility concepts for which new suppliers are already positioning themselves. Moreover, it is creating additional opportunities for ZF as a system supplier.

Electromobility

Zero local emissions mobility is gaining ground worldwide – hybrid drives as well as pure electric drives for vehicles have long been a reality. ZF supplies both the core components for electro- mobility such as electric motors, rectifiers or power electronics as well as complete systems, covering all vehicle types, from e-scooters and passenger cars to 40-ton trucks.

Autonomous driving: the formula for success

Driverless cars require artificial intelligence and enormous computing power. ZF ProAI RoboThink is the most powerful AI-capable control unit in the automotive field. Moreover, the various ZF ProAI models offer exceptional flexibility.

Big cities with a big influence

Urbanization is a megatrend, the influx into metropolitan areas remains unbroken worldwide – with negative consequences for air quality and quality of life. Only tailored concepts deliver an efficient contribution to climate protection. ZF offers a wide range of solutions and technologies.
Technology Focus

Technology Focus

Innovation as core competency

From fully connected to autonomous, from low-emission to all-electric, ZF is anticipating the future of mobility. With its products, the company is electrifying anything that moves on wheels, from scooters to 40-ton trucks. And with its technology portfolio, ZF can help any type of vehicle to see, think and act. This is no ambitious target for the future, rather already a reality in many passenger cars, commercial vehicles and industrial applications.

What do a 200-kilowatt motor in a Formula E race car, the hybrid drive of a truck tractor and the motor of a pedelec all have in common? They are all produced and supplied by ZF. After all, the company has in its portfolio everything that vehicle manufacturers need for electrifying the drive – from components such as the electric motor and power electronics to complete systems. ZF drives are advancing micro mobility with e-scooters equally as much as they are advancing public transit with e-buses and goods transport with autonomous truck trailers or vans along the “last mile” to the city center.

When it comes to connectedness and autonomous driving, ZF innovations have also proven to be pioneering. In addition to sensor technology, software and computing power on board are gaining in importance because many driving functions can only be implemented in the vehicle using artificial intelligence. ZF technology plays to its strengths when it comes to enabling vehicles to see, think and act.

Yet even the traditional ZF competencies are gaining in importance in the age of automated driving. Using its connectivity solution cubiX, ZF is connecting all active and semi-active actuators in the car to create a complete system – made up of steering, shock absorbers, brakes and drive. This will generate a harmonious driving feel that may be particularly important when autonomous driving becomes more established. Then all of us as passengers can – at least part of the time – focus less on the road and more on doing other things during the drive.

Automated helpers for logistics

The trend toward highly automated and autonomous driving will give birth to entirely new kinds of vehicles. Passenger transport in cities will soon be handled by "people movers". In the future, people will be using their cars less to get from A to B. They will use a variety of transport modes instead, such as trains, robotaxis, people movers, which will all be an inherent part of what is called a modal split. In a joint venture with the company e.GO Mobile AG, ZF is working on producing these vehicles for which experts are forecasting a global demand numbering in the millions.

The same vehicles will also be used as “cargo movers” and will shape how goods are transported in the future. The ZF Innovation Van 2018, which is rated Level 4, demonstrates how package deliveries along the “last mile” can be optimized by automated driving functions, for example, to enable them to maneuver independently through an urban environment. Remote control is particularly helpful for delivery drivers. If the next address is so close that it makes more sense to walk there, the Innovation Van moves as if it were on a virtual leash. If there is no parking available in front of an address, the driver can send the vehicle ahead to the next stop where it will look for a parking space on its own.

The hybrid enabler

Thanks to plug-in hybrid drives, e-mobility has been a reality on the roads for a long time. Provided there is sufficient battery capacity, vehicles equipped with these drives are full-featured electric cars for everyday use.
Mobility Megatrends

Mobility Megatrends

On the road to tomorrow

How will we be mobile in the future? In what vehicles? How will the growing megacities worldwide be supplied with goods? ZF is already working on the answers to these questions. The “Next Generation Mobility” that ZF is promoting meets the essential needs and trends of tomorrow’s society and will thus become a mobility for the next generation.

Maybe the most important realization regarding progress is that there is not only one type of progress. Instead, it will occur on different roads at entirely different speeds, sometimes quickly, sometimes at a snail’s pace, but there will never be any turning back. Today, we can already foresee much of what will be keeping us and those after us busy in the 21st century.

A rise in urbanization: Rapid city growth is already being observed in many areas of the world today. By 2050, two-thirds of the world's population will be living in big cities, which means mobility has to be restructured. Left up to city planners, this will occur by combining public transit with autonomous transport systems. After all, only intelligent complete control systems can reduce the frequency of traffic jams.

What is quality of life? And how can it be increased? Many people have already answered this question for themselves, launching measurable trends which indicate greater value being placed on safety and the environment. This not only changes specialized disciplines like medicine or the food industry, but also mobility. ZF’s strategic goal of helping to create a mobile world with zero accidents and zero emissions contributes to this.

At the same time, the living environment of people is becoming more and more individual. This is also noticeable in consumer behavior. The fact that people wait patiently in lines to purchase standard goods to meet daily needs will soon be mentioned only in history books. The trend is heading toward individualized products that are meant to be delivered within one day. Production and also logistics processes are already adapting. And mobility will also become more individualized. Vehicle ownership will soon become less significant than access to mobility – through the use of app-supported ride-hailing services, for example.

Connectedness makes this possible – another trend that is already shaping our media behavior. It has long been an integral component of mobility and enables autonomous vehicles to communicate with one another so that they can transport their passengers to the desired destination more safely and efficiently.

All these developments are having an impact on the world of tomorrow, on the mobility of people and, ultimately, on Next Generation Mobility, as promoted by ZF.

For the new generations, mobility will no longer exclusively mean owning a car. The autonomous e.GO Mover is an electric minibus that will expand city passenger transport and private transport.

Robo-taxis – the clever way to get a ride

Novel urban mobility choices such as ride-hailing are one of the biggest drivers behind the development of autonomous driving. ZF uses a demo vehicle to demonstrate how it enables novel forms of mobility.
People@ZF

people@zf

Releasing the spirit of creativity

The working world is rapidly changing. Digitalization is bringing with it new agile methods that are finding their way into large corporations. For ZF employees, this creates additional options of sharing their expertise and working connectedly across national and organizational borders as a way of releasing a new spirit of creativity.

The working world is becoming more digital. But what does that mean? At ZF it means two things. First, there is the continuously optimized, well-established production system that has been in place for decades and features accurate planning processes that are streamlined to achieve zero-error quality from the development phase onwards. Secondly, and just as important, is the spirit of creativity, entrepreneurship and agility. These are key words that stand for a new working world with flat hierarchies, characterized by fast working styles and the courage to take new and innovative paths. ZF has therefore started to bring into line with one another the different working worlds along with their respective speeds. This dual operating system, as it is called, is helping ZF to better tap into current as well as new customer segments, which include traditional vehicle manufacturers, on the one hand, and young start-ups, on the other. That is why both operating modes have their place at ZF and do not compete with one another.

Agile work methods promote ideas and commitment from employees on a daily basis.

Award-winning ideas from employees

The expertise and commitment of the individual employees are important for both. Just how heavily ZF also relies on the creativity of its workforce was demonstrated in 2018. For the second consecutive year, the company held its internal idea competition, the “ZF Innovation Challenge.” Proposals for digitalizing existing products were requested as well as entirely new approaches. At the same time, the company focused on greater value for existing and new customers.

Also, the high number of patent applications and the over 776 projects that were submitted for the ZF Excellence Award, a global idea competition established in 2015, prove just how effective it is to give the creative spirit of ZF employees free rein.

Outstanding achievements honored

Employees from all over the world presented their most innovative projects of 2018 to ZF’s top management at the ZF Excellence Award finals

Digital Convention - unlock the potential

The first Digital Convention was a unique platform for more than 800 employees to network and exchange information on digital topics and trends. Chief Digital Officer summarizes her impressions in a blog post.
Board of Management

Board of Management

Management Board of ZF Friedrichshafen AG

Dr. Franz Kleiner Quality, Electronics and ADAS, Passive Safety Systems, Active Safety Systems, North and South America Region | Dr. Holger Klein Car Chassis Technology, Aftermarket, Asia-Pacific Region and India | Dr. Konstantin Sauer Finance, IT, M&A | Wolf-Henning Scheider Chief Executive Officer, Research & Development, Sales | Sabine Jaskula HR and Legal, Director of Labor Relations | Wilhelm Rehm Materials Management, Commercial Vehicle Technology, Industrial Technology | Michael Hankel Production, Car Powertrain Technology and E-Mobility