Stuttgart At ZF, the second largest German automotive supplier, the search for a new boss is entering its final phase. According to information from the Handelsblatt, the supervisory board will hold an extraordinary meeting on Friday. The main issue should be who should take over the management of the company after the previous CEO Wolf-Henning Scheider. It is becoming apparent that, despite external candidates, an in-house manager is likely to win the race. The new chairman of the supervisory board, Heinrich Hiesinger, is known for having a soft spot for internal candidates.
Holger Klein is now the favorite among the three potential managers from the company’s board of directors. The 52-year-old former McKinsey consultant joined ZF eight years ago and earned his merits for the chief post by playing a key role in the integration of the billion-dollar acquisition of TRW.
ZF took over the Americans for a sum in the double-digit billions – the largest acquisition in the company’s history. The foundation company, which grew up with transmissions and chassis, was able to catch up with the industry leaders Bosch and Continental in future technologies such as electromobility and autonomous driving.
ZF board member Klein was also involved in the strategic realignment of ZF and the expansion of international activities. In 2017 he took over the management of the core division Car Chassis Technology. Klein has been on the board since October 2018. He is particularly responsible for the Asian key customers and is therefore currently relocating his areas from Shanghai. From there he also heads the chassis division.
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In addition to Klein, opportunities are also attributed to Stephan von Schuckmann, head of the drive division, and Martin Fischer, head of active and passive safety technology.
CEO Wolf-Henning Scheider is leaving at the end of the year
CEO Scheider, who will be in office until the end of the year, announced a few weeks ago that after five years in office he would not be looking for a second contract and would be leaving at the end of the year. Since then, the new chairman of the supervisory board and ex-Thyssen Krupp supervisor Heinrich Hiesinger has been looking for a successor. Scheider was the only external manager to date at the head of the foundation company.
Andreas Brand, the Lord Mayor of Friedrichshafen, as head of the Zeppelin Foundation, is the key shareholder. The foundation holds more than 93.8 percent of the shares in ZF. He does not comment on the pressing personnel issue. But the mayor shares many interests with the employees – for example, when it comes to strengthening the Friedrichshafen location in the coming years. General works council chief Achim Dietrich had already indicated in an interview with the “Südkurier” that he would prefer an internal candidate.
It was different with Scheider at the beginning of 2018. His predecessor Stefan Sommer had fallen out with the supervisory board and especially with the mayor of Friedrichshafen in the course of 2017 after he had not received the green light for the billion-euro takeover of the brake manufacturer Wabco. The fronts were hardened. The head of the supervisory board at the time, Franz-Josef Paefgen, who was also a member of the supervisory board at the competitor Mahle, skillfully guided the then Mahle CEO Scheider in a flash move from Stuttgart to Lake Constance.
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At that time, the capital side of the Supervisory Board really wanted an outside heavyweight to bring calm back to the company. Two years later, Scheider was allowed to make up for the strategically important takeover of Wabco, which Sommer was still refused. However, some managers with potential have left the company in recent years, which many industry observers attribute to Scheider’s strict management style.
Economically, ZF did quite well last year. Since car manufacturers prefer high-margin luxury models in times of chip shortages, sales of expensive automatic transmissions have also increased. However, the limited production has not left the supplier completely cold: According to Scheider, the drop in sales due to the production cuts by the car manufacturers adds up to an additional 2.7 billion euros.
The supplier must qualify its employees for the electric age.
(Photo: dpa)
Overall, however, ZF’s sales increased by 17.5 percent to 38.3 billion euros last year – and are thus again higher than before the pandemic. The adjusted EBIT increased from one to 1.9 billion euros, the EBIT margin rose to five percent. Earnings after taxes turned from minus 741 to plus 783 million euros.
The company recently remained cautious about the outlook for 2022 in view of the Ukraine war, supply bottlenecks and inflation. Subject to no further escalation, ZF expects group sales of more than 40 billion euros this year. The adjusted EBIT margin should be between 4.5 and 5.5 percent. However, ZF will present its half-year figures at the beginning of August. There could be forecast corrections.
High levels of debt harbor risk potential
One of the challenges of the new CEO are the high debts from the two major acquisitions of TRW and the brake specialist Wabco, which currently amount to ten billion euros. This is where the greatest potential for setbacks lies for the company, because the impending economic downturn and the turnaround in interest rates are increasing the pressure here: Loans are always linked to compliance with earnings targets. Although the equity ratio rose from 12.1 to 19 percent at the end of 2021, it is significantly weaker than, for example, at industry leader Bosch, which is 45 percent.
In addition, ZF must master the transformation to electromobility – and avoid mass layoffs as far as possible. ZF recently granted the location of the largest transmission plant in Saarbrücken, which alone has 9,000 employees, until the end of 2025. Because the supplier has orders in the tens of billions for electromobility. But the qualification of the workforce is a mammoth task – just like with the competitors Bosch, Continental, Vitesco and Schaeffler.
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