August 3, 2017 / 8:10 PM / 3 years ago

Auto supplier ZF feels able to attempt a large takeover

FRANKFURT (Reuters) - Automotive supplier ZF Friedrichshafen [ZFF.UL] is able to consider large acquisitions in the wake of the unlisted company’s $13.5 billion euro takeover of TRW in 2015, Chief Executive Stefan Sommer said on Thursday.

“We feel well positioned, we feel strongly positioned, also for larger takeovers,” Stefan Sommer said in a call with journalists to discuss the Germany-based company’s first-half earnings, and its appetite for further deals.

Sommer declined to comment on a Wall Street Journal report last month, which said ZF attempted to buy U.S. commercial vehicle parts supplier Wabco Holdings (WBC.N) before talks broke down. [nL5N1KG73X]The unlisted supplier based in Friedrichshafen, a town on the shores of Lake Constance, wants to cut its dependence on combustion-engined cars, and has sought to build up its expertise in components for autonomous and electric vehicles.

With the TRW deal, ZF added sensors, brakes and airbags to its core business of manufacturing automated gearboxes for combustion-engined and hybrid cars.

Since then it has sought to further expand its expertise in complex onboard electronics to make acceleration, braking and engine management systems more intelligent.

Earlier this year, ZF took a 40 percent stake in German lidar maker Ibeo Automotive and made an unsuccessful $515 million bid for Swedish brake systems group Haldex (HLDX.ST).

To shore up its finances, ZF has sought to pay down its debt, which now stands at 7.6 billion euros, the company said.

First-half earnings also showed an improved profit margin, thanks to synergy gains and improved business in the wake the TRW takeover.

ZF said its adjusted earnings before interest and taxes (EBIT) rose 9 percent to 1.2 billion euros ($1.42 billion), with sales up 2.7 percent to 18.3 billion euros.

Its EBIT margin was 6.6 percent, up from 6.3 percent in the first half of last year, which ZF said was despite higher spending on autonomous and electric cars technology.

“We were able to achieve this by boosting operating performance and realising synergies resulting from the acquisition of TRW,” Chief Financial Officer Konstantin Sauer said in a statement, without being more specific.

Reporting by Edward Taylor and Ilona Wissenbach; Editing by Maria Sheahan and Adrian Croft

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