FRANKFURT -- ZF said research and development costs for electric- and autonomous- car technologies would remain at high levels after it posted a 4.5 percent rise in adjusted earnings before interest and tax (EBIT) for 2017 to 2.3 billion euros ($2.8 billion), boosted by transmission sales.
Last year, the German supplier spent 2.2 billion euros on r&d, an increase of almost 15 percent compared to 2016.
"This year, significantly more than 2 billion is set to be channeled into development work around the world, with the aim of advancing electric drives and the hybridization of transmission technology as well as vehicle safety systems and automated driving," ZF said in a statement on Thursday.
The supplier said it was building two new factories for electric drive components.
Despite the investments, ZF is aiming to achieve an adjusted EBIT margin of around 6 percent and an adjusted free cash flow of over 1 billion euros. The adjusted EBIT margin in 2017 was equal to the previous year's, at 6.4 percent, the company said.
In 2017, group sales rose 3.6 percent to 36.4 billion euros. Next year, ZF expects sales of around 36.5 billion euros, it said.
ZF was able to cut gross debt to 6.4 billion euros, almost half of the original amount since it acquired U.S. based rival TRW in 2015, the company said.
ZF said cutting down its debt had helped it to get re-rated to investment grade level BBB- by Standard & Poor's.