ZF Friedrichshafen said it would not offer a 2020 financial forecast because of the "unprecedented" market situation tied to the coronavirus outbreak.
ZF reported that 2019 earnings before interest and taxes (EBIT) fell by around 30 percent, to 1.5 billion euros from 2.1 billion euros in 2018. Adjusted EBIT margin fell to 4.1 percent in 2019 from 5.6 percent in 2018. Free cash flow fell to 803 million euros from 891 million euros.
Adjusted group sales fell slightly in 2019, by 1.9 percent, to 36.5 billion euros from 36.9 billion in 2018.
ZF said earnings were affected by higher R&D costs and capital expenditures such as preparing factories to produce electric drives at sites in China, Germany and Serbia.
The downturn in the global auto market also played a role, ZF said. In August 2019 the supplier adjusted its financial outlook downward, citing reduced demand, especially in China. It said this week that it had reached those targets.
"At present, we are witnessing how the markets are collapsing overnight," ZF CEO Wolf-Henning Scheider said of the effects of the coronavirus pandemic. He said that the supplier would work to "secure employment and income wherever the appropriate tools are available."
"Its effects are uncertain, which is why we are currently not in the position to make a valid forecast for 2020," he said of the coronavirus outbreak.
Scheider said production had resumed in Asia and that ZF was prepared to ramp up factories in Europe and North America once demand returned.
By region, 2019 sales fell 4 percent in Europe, to 16.7 billion euros from 17.4 billion euros; increased 1.7 percent in North America to 10.4 billion euros from 10.3 billion euros; and 3.3 percent in Asia-Pacific to 8 billion euros from 7.9 billion.
ZF is also preparing to close on its acquisition of Wabco, which makes brakes for commercial vehicles. To finance the transaction, ZF placed bonds and bonded loans totaling 4.8 billion euros on the capital market last October.
ZF ranks No. 5 on the Automotive News Europe list of the top 100 global suppliers with worldwide sales to automakers of $36.9 billion in 2018. About 94 percent of ZF's shares are controlled by the Zeppelin Foundation.